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Section III Retention

Employee Turnover and Strategies for Retention

Angela R. Grotto, Patrick K. Hyland, Anthony W. Caputo and Carla Semedo

Introduction

For decades, business leaders, human resource professionals and organizational researchers have sought to understand what causes employees to quit their jobs, and with good reason: turnover, whether functional or dysfunctional, can be expensive and disruptive. One recent study found that turnover costs (e.g., separation costs, replacement costs) range from 90% to 200% of the exiting employee’s salary (Allen, Bryant & Vardaman, 2010). When turnover increases, the social fabric of an organization is disrupted (e.g., Batt & Colvin, 2011), intangible knowledge and skills are lost (Nyberg & Ployhart, 2013), operational effectiveness decreases (e.g., Ton & Huckman, 2008), accidents rates rise (e.g., Shaw, Gupta & Delery, 2005), customer service and quality suffer (e.g., Hancock, Allen, Bosco, McDaniel & Pierce, 2013) and customer satisfaction declines (Heavey, Holwerda & Hausknecht, 2013), which in turn can negatively impact a company’s financial performance (e.g., Park & Shaw, 2013; Shaw, Duffy, Johnson & Lockhart, 2005). In light of such negative consequences, many organizations place great emphasis on identifying the factors that impact employee retention and turnover.

Over the past 50 years, a robust body of literature focused on employee retention and turnover has emerged. Starting with March and Simon’s seminal work (1958), researchers have explored how a wide range of factors, including, attitudes, cognitions, experiences, events and economic conditions, affect an employee’s decision to keep or quit a job. Considered together, these studies emphasize that turnover is a complex phenomenon influenced by a host of distal and proximal forces, contextual and individual difference variables, and on- and off-the-job experiences and events.

While an abundance of turnover and retention research exists, few recent integrative reviews have been published, making it challenging to understand what has been discovered to date. In this chapter, we seek to help researchers and practitioners develop a comprehensive understanding of turnover and retention by synthesizing the most prominent

The Wiley Blackwell Handbook of the Psychology of Recruitment, Selection and Employee Retention,

First Edition. Edited by Harold W. Goldstein, Elaine D. Pulakos, Jonathan Passmore and Carla Semedo. © 2017 John Wiley & Sons Ltd. Published 2017 by John Wiley & Sons Ltd.

theories, studies and models that have emerged over the past 50 years. In the first section, we trace the evolution of turnover and retention research, showing how scholars have progressively expanded their focus over the past five decades. In the second section, we present a unifying framework of the dynamic process of turnover that integrates the major factors in an employee’s decision to quit. In the third section we highlight evidence-based strategies for managing turnover and retention within organizations. Finally, we highlight directions for future research. Our hope is that this review will help integrate a broad set of findings, generate applicable insights and spur new research.

 
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