Academic journal article Public Personnel Management

The Impact of the Financial and Economic Crisis on Turnover Intention in the U.S. Federal Government

Academic journal article Public Personnel Management

The Impact of the Financial and Economic Crisis on Turnover Intention in the U.S. Federal Government

Article excerpt

Introduction

Turnover among employees within public sector organizations has been a constant concern for at least the past 20 years (Pitts, Marvel, & Fernandez, 2011). Positive as well as negative aspects of turnover have been studied (Meier & Hicklin, 2008; Pitts et al., 2011). Although some turnover is normal and even considered important for the health and viability of an organization in the long run (Dalton & Todor, 1979), turnover can also lead to higher costs and disruptions of the normal flow of activities (Becker, 1978). More precisely, turnover can give rise to costs related to the loss of the performance and expertise of the employee, separation costs, recruitment costs, training costs, and lost productivity costs (Grissom, Nicholson-Crotty, & Keiser, 2012; Kellough & Osuna, 1995; Lambert & Hogan, 2009; Moynihan & Landuyt, 2008). Furthermore, replacing employees becomes more difficult because talents are scarce due to the upcoming shortage arising from retirement (Hatum, 2010). Consequently, the underlying bias of turnover research is that voluntary turnover is mostly a negative outcome for an organization.

In recent literature (Pitts et al., 2011; Wynen, Op de Beeck, & Hondeghem, 2013), turnover has been conceptualized as the result of an employee decision making process related to (a) individual demographic and personal factors and (b) organizational factors. Newly proposed models are often an extension or refinement of these models, which are considered as the basis of turnover theory within the field of public management. Despite wide agreement on core models, it is still important for researchers to consider other factors besides individual and organizational characteristics as reasons for employee turnover. This article therefore seeks to provide a better empirical understanding of the causes of turnover in the public sector while taking an external factor, more precisely, the effect of the financial and economic crisis, into account.

Unprecedented events that took place in late 2008 in the U.S. market for sub-prime mortgages escalated to global proportions leading to the global economic recession (Stefaniak, Baaki, & Blake, 2012; Wickramasinghe & Perera, 2012). This financial and economic crisis has strongly affected both the public and the private sectors. Although there exists some empirical literature on the effect of the economic and financial crisis on job insecurity and turnover in the private sector, such literature is still lacking for the public sector.

By constructing panel data using different waves from the U.S. Federal Employee Viewpoint Survey and by applying a first difference estimator, this article examines the antecedents of turnover in the public sector while taking the effect of the financial and economic crisis into account. Panel data allow us to examine the effect of independent variables over several years, while a first difference estimator is particularly interesting in the sense that this approach allows us to address the problem of omitted variables and, consequently, endogeneity.

The remainder of this article is organized as follows: "Determining Public Sector Turnover Intention" section describes the theoretical underpinnings, whereas "Data" section describes the data and offers some descriptive statistics. The used methodology, as well as our main findings, is discussed in "Analysis and Results" section, which is followed by some concluding remarks.

Determining Public Sector Turnover Intention

A growing body of literature in organization theory and public administration points to a number of common factors associated with turnover. In line with Moynihan and Landuyt (2008), our approach derives from the assumption of March and Simon (1958) that intention to leave the U.S. federal government depends on the factors that influence an employee's desirability and ease of movement. …

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