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					            Motivations to Manage Turnover
1. Economic Trends
    • Directly related to economic conditions
      ∙ Unemployment rate Aug. 2011: Nation 9.1% Iowa 6.0%
      ∙ Unemployment rate Aug. 2007: Nation 4.6% Iowa 3.6%
    • Turnover high when unemployment is low
    • Turnover low during poor economic times

2. Demographic Trends
    • Retirement patterns
    • Low number of workforce entrants
    • Next generation may prefer to work
      fewer hours

3. Changing Employment Patterns
    ∙ Shorter job tenures
    • Ages 18 to 32: 8.6 jobs
    • Overall, employees changing jobs every 4 years
                Motivations to Manage Turnover
4. Normal Turnover?
 ● Need industry specific data: BLS, Fortune magazine,
     CompData Surveys
     Some industries (manufacturing) are lower: 5.9%/year
     Some are higher (hospitality): 24.1%
     Better companies have lower rates; average is 15%

 ● Fortune Magazine’s 100 Best Companies (next 2 slides)

 ● Company rate or level may not be ideal anyway (AZ
   Council)
                                                                                        Turnover Rates
                                                                                          by Industry




Source: http://www.compensationforce.com/2011/03/2010-turnover-rates-by-industry.html
  Fortune’s 100 Best Firms Demonstrate Low Voluntary
                        Turnover
Company                 Top 100 Ranking in  2010/11
                          2010 and 2011    % Turnover
SAS Institute                  1/1             3/2
Qualcomm                       9/33            2/2
S.C. Johnson                  83/70            2/3
NuStar Energy                 21/30            4/2
Cisco Systems                 16/20            3/3
General Mills                 90/58            4/2
Devon Energy                  20/41            4/3
Genentech                     19/35            2/3
 Fortune
Turnover Rates: Mental Health
                        Jobs                        66
  Human Resource Assistant
                                     14
                   Secretary
                                                                                 200
         Maintenance Worker
                                          27
                       Driver
                                 0
                    Therapist
                                           34
                        Cook
                                            40
               Case Manager
                                              47
                    Teachers
                                                         92
Behavioral Health Technician
                                     16
               Teachers Aide
                                                    60
                  Supervisor
             Clinical Director
                                           36
                 Accountant
                                                          100
                 HR Manager                33
                   Controller                       60
           Executive Director    0

                                 0             50        100      150        200       250
                                                         Annual Turnover Rates
                   Motivations to Manage Turnover
4. Normal Voluntary Turnover?
     •13 - 20% / year now normal; average 15%
     • Some industries and low level service:
       100 - 140% normal

 5. Need to Consider Customer Satisfaction
     Sears also linked T/O to customer satisfaction
             ▲Stores w/high customer sat: 54% turnover
             ▲Stores w/low customer satisfaction: 83% turnover

 6. Need to Manage (but not eliminate) Turnover
     ▪ Who is quitting?       ▪ What are the replacement costs?

 7. Need to Reduce High Replacement Costs (next slide)
             ▪ Direct        ▪ Indirect
                        TURNOVER COSTS
                                                       Based on Entry Level Salary of $47,097


Replacement Acquisition
  - Direct hiring costs                                                       $1098
  - Other hiring costs                                                          693

Replacement Training
  - Pre-assignment                                                             2833
  - Learning curve                                                              795
     (see learning curve graph)

Other costs
  - Unabsorbed burden                                                          2,549
  - Lost profit contribution                                                   1,452
                                 TOTAL                                        $9,420


*Entry level salary of Fortune 500 employee (2010 figures)
                                             Hypothetical Learning Curve for New Hires
Percent of Standard Proficiency Attained
                                           100

                                            80

                                            60

                                            40

                                            20

                                             0
                                                  1       25        50         75     100

                                                         Employment Duration (Days)
                                        TURNOVER COST EXAMPLES BY
                                                COMPANY AND POSITION

                                                 Company            Position            Cost

                                       State govt, (LA)      Protective services      $25,000
                                                             (police, wildlife &
                                                             fisheries, guards)

                                       Call center           Call center employee     $ 8,000
                                                             Supermarket cashier      $ 3,637
                                       Retail
                                                             Manager                  $ 79,672
                                       Insurance

                                                             Project Leader           $ 32,160
                                       Software
                                                             Systems engineer         $ 34,365
                                                             Hotel front desk-Miami   $ 5,688
                                       Hospitality           Hotel front desk-NY      $ 11,609


                                       Fast-food chain       Store Manager            $ 20,765
                                                             Counter Person           $ 1,204


Source: Kepner & Tregoe, Jan. 1999 (Saratoga
Institute Turnover Costing Model), SASHA Corp
2011
 Turnover Rates Among Fortune 100’s Best
Potential Savings
Company1               Number of                Turnover   Estimated     Reducing
                       Employees                  Rate   Turnover Cost Turnover 1%
                         (US)                            per employee2 Savings / year
    Merck                  39,489                   9%                   $7592                 $2,765,000
    Cerner                  2,953                   14%                  $8000                   $240,000
   Charles                 18,863                   12%                  $8329                 $1,512,000
   Schwab
    MBNA                   16,960                   15%                  $4800                 $1,000,000
   America
    Bank
Average US                 10,000                 15.6%                  $5000                   $500,000
 Company
Notes:
1. Based on Public Data from Fortune Magazine’s 100 Best Companies to work for January 2001.
2. Estimated Turnover Costs Calculated at 20% of most common entry level salary ($42,940) as provided in note 1.
Forms of Turnover
         • Nonvoluntary:
           Employer controlled
           (layoffs,
           terminations,
           downsizing)
         • Voluntary:
           Employee controlled
           (quits, retirements)
         • Gray Area: (spouse
           relocation,
           child/elder care
           problem, exit
Primary Reason For Leaving In Nursing Sample
                                Reasons Unknown                    10
                                 Personal Reasons                         15
                                              Death    0
                                         Retirement    0
                                        Poor Health    0
                                Temporary Position     0
           Completed Prescribed Service or Course      0
    Geographic Factors:Job Too Far, Leaving City                                               30
                     Family Illness or Home Duties     0
                                     To Stay Home          5
                                  To Attend School         5
                                          Pregnancy    0
                                          Marriage                               20
                              Enter Military Service   0
                       Unsatisfactory Work Hours
                                                           5
                                                       0
     Work Too Difficult; Misunderstanding of Duties
                                                       0
                         General Job Dissatisfaction
                                                       0
                          Present Wages Inadequate
                                                                   10
                               Other Employment
                                                       0   5      10    15     20     25      30    35
                                                               Percent of Voluntary Leavers
Analyzing Forms of Turnover
   Among Nurses from A
  Managerial Perspective:
    Organizational Level
                    Turnover
                     14.6%



              Voluntary                     Involuntary
                87%                            13%



 Functional                 Dysfunctional
    42%              58% (7.37% rather than 14.6%)
                     Turnover Measures

1. Separation Rate
                     # of employees who left during period
             =       avg. # of employees during period     X 100

      a. Jan. 1 - 20 employees 7 quit and are replaced, 2 new hires
         Jan 31 - 22 employees

             7/(20 + 22)/2 = 7/21 = 1/3 = .33 .33 x 100 = 33%


      b. Growth scenario
      Feb. 1 - 22 employees 16 new hires, 7 quit & are replaced
      Feb. 28 - 38 employees

             7/(22 + 38)/2 = 7/30 = .23 or 23%
                   Turnover Measures (Continued)

II. Instability Rate
                 # of initial employees who leave during a period
           =     # of initial employees                           X 100

       a. Jan.: 7/20 = .35 or 35%
       b. Feb.: 7/22 = .32 or 32%

III. Wastage Rate
                # of new employees who leave during a period
           =    # of new members                             X 100

       a. Between Feb. 1 & 28, 8 new hires quit: 8/16 = .50 or 50%

IV. Avg. Length = Sum of length of service for each employee
     of Service              # of members
       Predictors of Voluntary Turnover
1.  Age  Turnover
          (around ρ = -.14)

Length of service
   ▪ side bets
   ▪ health insurance less problematic
     if coverage is continuous

3. Sex & family size
  Men & women quit at similar rates
  ↑ # of dependents → ↓ T/O

4. Pre-employment predictors:
   ▪ prior turnover behavior
   ▪ others in Barrick & Zimmerman
        Predictors of Voluntary Turnover

5. Personality
   ▪ Conscientiousness (ρ = -.20)
   ▪ Emotional stability (ρ = -.18)
   ▪ Agreeableness (ρ = -.25)
   ▪ Extraversion (ρ = -.04) [zero]
   ▪ Openness (ρ = .10)
   ▪ Self-confidence (B&Z)
   ▪ Decisiveness (B&Z)

6. Union presence

7. Attitudes (job satisfaction, organizational
      commitment; see upcoming Hom Griffeth model)

8. Pre-employment interventions (e.g., RJPs)
Providing Job Candidates With Accurate and Complete
  Information About the New Job Reduces Turnover


        Sewing Machine                                                              40
                                            11.1
        Operators
                                            11.5
                                  6
        West Point Cadets
                                                                                          50
                                                                            33.8
        Telephone Operators
                                                                     27
                                                        19
        Insurance Agents
                                                                             35
                                                   15
        Bank Tellers
                                                                           33.1
                                                              22.4
        U.S. Marines                                                                      Control Group
                                                             21.1                         RJP Group
                                      8.5
        Nurses
                              0       10                20           30            40    50               60
                                                                Turnover Rates
       Predictors of Voluntary Turnover
 9. Work group size
10. Job enrichment
11. Task repetitiveness
12. Considerate leadership
13. Stress
14. Perceived job availability

15. Withdrawal behaviors: Lateness (rho = .06) and
    absenteeism (rho = .33)

16. Job performance (low performers quit more than
    high performers but low and high performers
    quit more than avg. performers)
                         Hom-Griffeth Model of Turnover
                    Satisfaction Influences:            Commitment Influences:
                    •Job Complexity                     •Procedural Justice
                    •Role Stress                        •Attraction of Internal Roles
                    •Group Cohesion                     •Job Security
                    •Compensation                       •Job Investments
                    •Leader-Member Relations            •Extra Organizational Conflicts
                    •Met Expectations                   •Conditions of Job Entry
                    •Negative Affectivity               •Commitment Propensity


                              Job                                 Organiza-
                          Satisfaction                             tional
                                                                 Commitment
Labor Market:                                                                             Shocks
•Unemployment
•Knowledge of
 Other Jobs                                                       Decisions to
•Relocation Costs                                                    Quit
                        Job-Seeking
                        Costs &
                        Benefits:
                        Turnover
                        Costs &
                        Benefits                Job
                                               Search
                                                               Evaluate
                                                              Alternatives
                                                                                     Resignation
              POSSIBLE POSITIVE
          CONSEQUENCES OF TURNOVER

1. Displacement of poor performers

2. Increased satisfaction among stayers

3. Infusion of new knowledge/technology via replacements

4. Facilitate organizational change

5. Increased internal mobility opportunities

6. Decrease in other “withdrawal” behaviors

7. Opportunities for cost reduction
 RECOMMENDATIONS FOR INCREASED
   UNDERSTANDING OF TURNOVER

1. Focus on occupational differences (more understanding
   of blue collar turnover needed)

2. Separate voluntary from non-voluntary turnover

3. Study turnover in the context of economic conditions and
   historical changes (e.g., new generations of employees,
   dual career families, new employment patterns of more
   frequent job changes).
            PRACTICAL STRATEGIES FOR
              MANAGING TURNOVER
1.  Hire more carefully
2.   Use pre-employment interventions (see example)
3.  Promote job satisfaction
4.  Promote job autonomy through job enrichment
5.  Use small work groups
6.  Reduce task repetitiveness
7.  Improve human relations skills of supervisors
8.  Reduce stress
9.  Promote organizational commitment (e.g., career counseling;
    side bets)
10. Emphasize person/job fit
11. Address non-work sources of turnover (e.g., elder care, EAPs)
   Demonstrating Cost Savings of RJP Retention Strategy

    Practical Application of a Control Group Evaluation
 Comparison     Turnover        Number of          Turnover      Total
   Groups      Rates (%)     Leavers (No. of       Cost per     Turnover
                             New Employees         Leaver ($)   Costs ($)
                                 Per 100)

 Control           17               17               6,018      102,306

 Realistic          5               5                6,018       30,090
 Job Preview
 Recipients

 Cost                                                            72,216
 Savings
 (Difference)
Based on public accounting firm case study, 1999
Four “Do’s and Don’ts” for Managing Turnover
• Don’t fail to make the business case for
  managing turnover—Do provide cost/ benefit
  data
• Don’t fail to approach turnover strategically--Do
  plan to attract & retain talent independent of
  market conditions
• Don’t just throw money at the problem—Do
  realize that compensation is often not the most
  important determinant of turnover
• Don’t ignore employee priorities—Do appreciate
  that employees first loyalty is to their own careers
  & that their assessment of prospects in and
  outside of your company will drive their turnover
  behavior.
  Articles and Benchmarking
• Discuss Mohr et al. (2011)
  Benchmarking and Articles
• Discuss Allen et al. (2010)
• What could you say to your boss to
  offset view that T/O is presently low
  and does not need to be managed?
• What are the 5 turnover
  misconceptions and how are they
  repudiated? (Based on Table 1 &
  meta-analytic summary in Figure 3)
Allen et al. (2010): 5 Turnover
        Misconceptions
• All T/O is the same
• People quit because of pay (relatively
  weak)
• People quit because of job
  dissatisfaction (overstated, about half)
• Little can be done to influence T/O
  decisions
• One retention strategy is most effective
        Barrick & Zimmerman
• Can “people problems” like turnover be
  avoided by selection using dispositional
  factors (e.g., personality)?

• How well do RJPS do, using evidence-based
  management? (Tries to build on its success)

• What is biodata and why are some forms not
  used? What types of biodata are
  hypothesized to predict turnover? (H1-H3)

• What are pre-employment factors known as
  “clear purpose” and “disguised purpose”
  predictors?
           Barrick & Zimmerman
      Re-worded Hypotheses (so supportive
      correlations will be negative in direction)

•   H1:   ↑ Prior Tenure → ↓ Turnover
•   H2:   ↑ Were Referred → ↓ Turnover
•   H3:   ↑ Friends & Family → ↓ Turnover
•   H4:   ↑ Intent to Stay → ↓ Turnover
•   H5:   ↑ Desire for Job → ↓ Turnover
•   H6:   ↑ Self Confidence → ↓ Turnover
•   H7:   ↑ Decisiveness → ↓ Turnover
        Revised Table 2 Using Combined Samples to Predict Vol. T/O

                            Order of Entry #1                  Order of Entry 2

                     Step         Step          Step    Step        Step          Step

                      1             2            3        1           2            3

                    Biodata    Disguised     Clear      Clear    Disguised    Biodata
                               Purpose      Purpose    Purpose   Purpose

         Adjusted     .29          .33          .33      .18         .22          .33
            R
         Change       ---          .05          .01      ---         .06          .11
         (∆) in R
          Approx                  11%           11%                  5%           11%
           R2


Upshot: Biodata (H1 to H3 items) best predictor, even when considered last
(order #2). Clear purpose measures not useful when entered last; too
transparent. Disguised purpose measures helpful in both entry orders (.05
and .06). Skip remaining analyses.
           Barrick & Zimmerman
• Table 3 just an alternate statistical methodology. Table 4
  indicates that use of these measures would not result in
  adverse impact on protected subgroups.

• Practical implications: Biodata indicators examined here,
   along with “disguised purpose” measures of self confidence
   and decisiveness predict turnover as well as RJPs.
  (RJP: ρ = -.09; R2 =.01 vs. adj. R =.33 (Table 2) which yields
   adj. R2 = .11)

• The value may be in combining biodata and personality with
  job factors (like job sat) to reduce turnover.
               Holtom et al.
• Article rich in practical suggestions and
  examples of retention
• Emphasis is on aligning the retention
  strategy with the business strategy
• Reinforces idea that the reasons people
  quit are distinct from the reasons people
  stay (p. 318).
• What is job embeddedness?
• Thoughts on job embeddedness
  examples? Any downsides?

				
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