Employee Turnover

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Overview of Employee Turnover Research The impact of turnover has received considerable attention by senior management, human resources professionals, and industrial psychologists. It has proven to be one of the most costly and seemingly intractable human resource challenges confronting organizations. This paper provides a summary of information, abstracted from published research, on the costs of turnover, factors contributing to its magnitude in organizations, and proposed remedies. Costs of TurnoverAnalyses of the costs associated with turnover yield surprisingly high estimates. The high cost of losing key employees has long been recognized. However, it is important for organizations to understand that general turnover rates in the…show more content…
Increased unemployment insurance costs. Using an example from the health care industry, Cascio (2000) calculated that the cost of replacing 288 employees per year (in a hospital with 200 beds employing 1200 persons with a turnover rate of 2% per month) was $2,888,295.52 when all sources of costs were analyzed. Moreover, a recent Business Week (1998) study estimated that the replacement costs alone, are over $10,000 for about half of all jobs and approximately $30,000 for all jobs. These estimates highlight the considerable costs that can be associated with turnover. The Causes of TurnoverThere are a number of factors that contribute to employee turnover. We explore some of these factors in more detail below. The economy - in exit interviews one of the most common reasons given for leaving is the availability of higher paying jobs. Some minimum wage workers report leaving one job for another that pays only 50 cents an hour more. Obviously, in a better economy the availability of alternative jobs plays a role in turnover, but this tends to be overstated in exit interviews. The performance of the organization - an organization perceived to be in economic difficulty will also raise the specter of impending layoffs. Workers believe that it is rational to seek other employment. The organizational culture - much has been written about organizational culture. It is sufficient to note here that the reward system, the

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