Hence, potential positive effects for organizations are overlooked (Glebbeek and Bax, 2004). 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. 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. Depending on the nature of the separation, employee turnover may be categorized as functional or dysfunctional. In some instances, turnover may influence profits and organizational goals positively. Too often, organizations view involuntary and voluntary employee turnover equally. As a result, many employers invest large expenditures in employee retention programs in an effort to avoid the employee turnover costs. 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). The impact of employee turnover is usually assessed by focusing on its effects on an organization's end performance. Most traditional literature suggests that voluntary employee turnover is detrimental and costly to an organization (Clark, 2008 Miller, 2008 O'Reiley, 2008). On a net basis, the experience was slightly dysfunctional, but not significantly so.Įmployee turnover can be a vital concern for managers and has been viewed as inherently negative for organizational bottom-line (Miller, 2008). 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. 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. The assumption is that these costs are negative for the organization. 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.
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