11 Feb 2017

Organisational change and employee turnover


Employee turnover is a much studied phenomenon (Shaw et aL, 1998, p. 511). Indeed, one recent meta-analysis (Hom and Griffeth, 1995) reviewed over 800 such studies (Iverson, 1999). However, there is no standard account for why people choose to leave an organisation (Lee and Mitchell, 1994).

This is noteworthy because it is typically the occasions where people choose to leave (i.e. voluntary, rather than involuntary turnover) that concern organisations and organisational theorists. Voluntary turnover incurs significant cost, both in terms of direct costs (replacement, recruitment and selection, temporary staff, management time), and also (and perhaps more significantly) in terms of indirect costs (morale, pressure on remaining staff, costs of learning, product/service quality, organisational memory) and the loss of social capital (Dess and Shaw, 2001).

Although these costs are a feature of involuntary turnover (during downsizing, or where employees are made redundant), turnover is more commonly voluntary. Additionally, whereas in downsizing programmes, the more able employees are retained, when it comes to voluntary turnover, the best performers are also more likely to find alternative employment, and thus leave Gackofsky et aL, 1986).

Although there is no standard framework for understanding the turnover process as a whole, a wide range of factors have been found useful when it comes to interpreting employee turnover, and these have been used to model turnover in a range of different organisational and occupational settings.

They include: job satisfaction (Hom and Kinicki, 2001); labour market variables (Kirschenbaum and Mano-Negrin, 1999); various forms of commitment (see Meyer, 2001 for a review); equity (Aquino et aL, 1997); psychological contract (Morrison and Robinson, 1997); and many others (see Morrell et al. (2001a) for a review).

However, there is little research specifically exploring the link between organisational change and turnover and this is a gap in the existing literature.

No one would seriously challenge the idea that mismanaging organisational change can result in people choosing to leave. Indeed, as noted, it may result in the highest performing (and therefore most employable) employees leaving (Jackofsky et aL, 1986). However, explaining how and why organisational change can result in differential rates of turnover is less straightforward.

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