Employee Turnover has always been a variable most companies aim at minimizing. The assumption was that high turnover leads to more losses due to investments done by the organization, meanwhile low turnover means more stable company and investments well-made. Does this assumption still stand true? and how do employment systems effect employee turnover in light of the article by Batt and Colvin “An Employment Systems Approach to Turnover: Human Resources Practices, Quits, Dismissals,and Performance”?
In their article “An Employment Systems Approach to Turnover: Human Resources Practices, Quits, Dismissals,and Performance”, Batt and Colvin set out to answer the question of which employment systems and management practices increase turnover and to distinguish between harmful and beneficial employee turnover, as well as to shed some light on the conditions associated with it.
The writers examine the relationship between quits and dismissals and different variables of the employment systems: work organization, investment and inducement practices, performance-enhancing expectations, and the quintessential customer satisfaction metric.
The authors initially aimed to advance the literature on the antecedents, and consequences of quits and dismissals, and were successful in establishing consistency between the two.
They also concluded from the research findings negative relationships between high-involvement work practices, investments and inducements, and union representation rates on one hand and quits, dismissals, and total turnover rates on the other. However, a positive relation was established between performance-enhancing incentives on one hand and quits, dismissals, and total turnover rates on the other.
The other major correlation established by this study is the negative effect of quits and dismissals on customer satisfaction.
The authors concluded that the antecedents for both quits and dismissals are quite similar, a conclusion that challenges results of previous research.
Abelson and Basysinger in “Optimal and Dysfunctional Turnover: Toward an Organizational Level Model” suggested that a certain amount of employee turnover is useful in reducing stagnation and improving innovation. Yet, the question of how much turnover is harmful or beneficial, and under what conditions and why was not thoroughly explored in the study, instead, the authors recognized that some organizations may aim for a high turnover or a balanced one, but fell short of providing an in depth study of the driving factors behind organizationsâ€™ decisions on that subject. Shorey in “An Analysis of Quits Using Industry Turnover Data” argued that the effectiveness of a firm is dependent on moderation between both levels of turnover and technology, while Allen et al. in “Retaining talent: Replacing misconceptions with evidence-based strategies” argued that “the assumption that turnover is inherently bad for organizations is a widely held managerial misconception.” Clearly, the views on the consequences of employee turnover are diverse and multifaceted.
The authors also ascertained that the association between employee turnover and employee performance is dependent on many uncharted variables such as industry, organization type, and market, all of which demanded further exploration.
Hancock et al. in “Meta-analytic Review of Employee Turnover as a Predictor of Firm Performance” emphasized the importance of industry norms in determining whether a firmâ€™s turnover rate poses a competitive edge over its rivals or not. Clearly, that notion challenges researches into considering market data as a benchmark to build upon their findings, increasing the significance of these findings in the process.
Given that the surveys used were 5 years apart, the identifiable 1998 sample was just 40% of the 2003 one, in addition, it is likely that the effects of employee turnover were either diluted or concentrated by the changing economic and fiscal factors that came into effect during the five year gap (as per Klemmer in “Job Openings and Hires Decline in 2008”).
Although some questions raised by the authors were left unanswered, the text still holds much value in terms of advancing the literature on the topic and in its conclusive findings that linked variables of employment systems (work organization, investment and inducement practices, performance-enhancing expectations, and customer satisfaction) into quits and dismissals, and established correlations between them.
The study hinted at the notion of “Optimal Turnover”, if only as a recommendation for future research. Indeed, we are witnessing the emergence of a “Balanced Turnover” concept whereby employers should seek to stabilize turnover, rather than minimize it. Employee turnover cannot be avoided, only anticipated, and as a result, it should be managed in an anticipatory manner in order to be contained.
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