Academic journal article SAM Advanced Management Journal

A Study of the Dysfunctional and Functional Aspects of Voluntary Employee Turnover

Academic journal article SAM Advanced Management Journal

A Study of the Dysfunctional and Functional Aspects of Voluntary Employee Turnover

Article excerpt

Limiting employee turnover is widely accepted as a goal by organizations and by academic researchers because of the explicit and implicit costs associated with it. The assumption is that these costs are negative for the organization. However, a closer look at voluntary turnover and the relationship between it, employee quality, and salary differences suggests alternative conclusions regarding overall utility for organizations. A study of employment records of 49 leavers and replacements at a regional insurance company found pay savings for the company on one hand, but some loss of skills. On a net basis, the experience was slightly dysfunctional, but not significantly so.

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Employee turnover can be a vital concern for managers and has been viewed as inherently negative for organizational bottom-line (Miller, 2008). Most traditional literature suggests that voluntary employee turnover is detrimental and costly to an organization (Clark, 2008; Miller, 2008; O'Reiley, 2008). The impact of employee turnover is usually assessed by focusing on its effects on an organization's end performance. Typically, the evaluation of costs associated with employee turnover considers the following: advertising fees, recruiter fees, management's time for decision making, Human Resource's recruiting time, selection, training, overtime expenses from other employees needed to pick up slack, lost productivity and sales, decreased employee morale, and disgruntled customers (Babatunde and Laoye, 2011). As a result, many employers invest large expenditures in employee retention programs in an effort to avoid the employee turnover costs.

Too often, organizations view involuntary and voluntary employee turnover equally. In some instances, turnover may influence profits and organizational goals positively. Depending on the nature of the separation, employee turnover may be categorized as functional or dysfunctional. Functional employee turnover is when low-performing employees are replaced by higher-performing ones, and dysfunctional turnover is the reverse, causing the remaining employees to pick up the slack.

... the potential danger of a research practice that concentrates on the causes of employee turnover while neglecting its effects: such research is based on the assumption that employee turnover is an important organizational problem and should be dealt with accordingly. Hence, potential positive effects for organizations are overlooked (Glebbeek and Bax, 2004).

Nonetheless, this distinguishing factor suggests that organizational researchers should focus on the functionality of employee turnover and not only on the frequency of employee turnover.

Statement of the Problem

Although employee turnover has been viewed as a concern for an organization's bottom-line, it does not always affect an organization negatively. The nature of an existing employee's departure determines the type of employee turnover experienced. The current research does not examine the determinants of turnover, but rather explores the consequences. An organization may assess the effects of employee turnover by evaluating each employee separation and determining the performance required for each replacement to result in functional turnover. This study makes the assumption that some turnover is desirable and functional for organizational effectiveness. Therefore, the problem addressed in this study is to determine whether voluntary employee turnover experienced by the organization is functional or dysfunctional.

Significance of the Study

The traditional focus of turnover research has been on frequency. This research, in contrast, offers a practical analysis for considering not only the frequency of employee turnover, but also the functionality. Viewing all employee turnover as uniform occurences overstates its dysfunctional aspect. Empirically, our focus deviated from the assumptions common in employee turnover research by focusing on the effects rather than the determinants. …

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