In the context of human resources, turnover is the act of replacing an employee with a new employee.
Most HR movement takes place through employee promotions, demotions and transfers. Another form of employee movement involves turnover: the movement of employees out of the organization. Turnover results from resignations, transfers out of organizational unites, discharges, retirement and death.
A certain amount of turnover is expected, unavoidable, and considered beneficial to the organization. New employees may inject fresh blood into the company by introducing new ideas and methods and innovative, more effective ways of doing things. In addition, turnover may help rectify poor hiring and placement decisions. Such turnover is referred to as functional turnover.
Thus, some turnover renews a stagnating organization. But excessive turnover creates an unstable workforce and increases HR costs and organizational ineffectiveness. Turnover that hurts the organization is known as dysfunctional turnover. Example include the following:
The causes of turnover are a complex mix of factors both internal and external to the organization. General economic conditions have an important bearing on the overall availability of jobs. Thus, turnover closely follows economic swings; turnover is generally high during period of growth or prosperity (when jobs are plentiful) and low during recessions and low points in the business cycle. Another factor that affects turnover is the local labor market, which is determined by both local economic conditions and the supply-demand ratio for specific kinds of occupations and professions in that labor market. Personal mobility, or the extent to which one is bound to a particular area because of family or other social ties, is also a factor in deciding whether to leave a particular job. Employees who perceive a low degree of job security in their present jobs may be motivated to seek employment in organizations where they believe they have a greater degree of security exists. Finally several demographic factors have been linked to high turn over. Employees with a propensity to quit are young employees with little seniority who are dissatisfied with their jobs. A large percentage of voluntary turnover occurs in the first few months of employments. Employees with relatively large families and important family responsibilities tend to remain on their job.
Like absenteeism, turnover may stem from a variety of causes. Therefore it is generally prudent to research the problem by using a variety of research methods. When researching turnover, management is usually concerned only with learning more about voluntary turnover - the reasons why good employees quit. Those who retire or are terminated for unsatisfactory performance are generally not the focus of research.
Because job dissatisfaction is a significant cause of turnover it important to pinpoint specific areas of work that are causing high level of dissatisfaction. Exit interviews are particularly valuable in discovering the causes of turnover. In fact, one of the main reasons for conducting the exit interview is to determine why the employee is quitting.
One interesting way to research turnover is to determine with people stay. Four profiles can describe most employees:
Programs, policies and changes that can reduce turnover include the following:
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