Reducing Turnover through Personnel Selection
DENNIS S. JOY
High rates of employee turnover have plagued many business organizations for years. Turnover leads to morale problems, disrupts team functioning, and results in high retraining costs. In 1980 the average monthly turnover rate for all companies was approximately 2 percent ( Bureau of National Affairs, 1980), for an annual rate of approximately 24 percent. In an average company, turnover among newly recruited college graduates can be as high as 50 percent during the first five years of employment ( Fortune, 1981). This is supported by more recent statistics that indicate the average tenure in current occupations for all ages and all occupations is 6.6 years ( Monthly Labor Review, 1988). And, in high-turnover segments of the labor market (e.g., young entry-level sales and service workers, 16-24 year olds) the average tenure is only 1.7 years. The annual turnover rate among part-time clerks and cashiers in the convenience store industry can be as high as 134 percent ( NACS, 1988).
High rates of dysfunctional employee turnover can represent substantial and unacceptably high costs of doing business. Frequent consequences are administrative costs associated with recruitment, selection, training, and development ( Cascio, 1982; Mowday, Porter & Steers, 1982). Cascio ( 1982) cites replacement costs for various insurance company personnel ranging from approximately $13,000 for a claims investigator to approximately $400,000 for an experienced