The Australian Small Business Blog

Friday, July 21, 2006

Staffing Turnover and Retention (Part 1)

There have been a number of factors that appear to be consistently linked to turnover. Age, tenure, overall satisfaction, job content, intentions to remain on the job, and commitment were all negatively related to turnover (i.e. the higher the variable, the lower the turnover). Causes of turnover include: job satisfaction, organisational commitment, comparison of alternatives and intention to quit.

Organisational commitment
There is a significant association between organisational commitment and turnover. Employees with strong affective commitment stay with an organisation because they want to, those with strong continuance commitment stay because they need to, and those with strong normative commitment stay because they feel they ought to. All three components of commitment were a negative indicator of turnover.

Job satisfaction
The main reason by far for people leaving their employer was for more interesting work elsewhere. It is generally accepted that the effect of job satisfaction on turnover is less than that of organisational commitment.

The link between satisfaction and commitment
There are strong causal links between stress and satisfaction (higher stress leads to lower satisfaction) and between satisfaction and commitment (lower satisfaction leads to lower commitment). There is also a reciprocal relationship between commitment and turnover intentions (lower commitment leads to greater intentions to quit, which in turn further lowers commitment). In summary, only commitment directly affected turnover intentions.

Wages and conditions
Past research conducted on the link between dissatisfaction with pay and voluntary turnover appears to be inconclusive. Results from studies on the role of pay in turnover were mixed but that often there was no relationship between pay and turnover. Other studies found no significant relationship.

On the other hand the most important reason for voluntary turnover is higher wages/career opportunity, however there is an inverse relationship between relative wages and turnover (i.e. establishments with higher relative pay had lower turnover).

Pay and performance
Analysis shows a relationship between pay, a person’s performance, and turnover. When high performers are insufficiently rewarded, they leave. Where collective reward programs replace individual incentives, their introduction may lead to higher turnover among high performers.

Training and career development
Establishments that enhance the skills of existing workers have lower turnover rates. However, turnover is higher when workers are trained to be multi-skilled, which may imply that this type of training enhances the prospects of workers to find work elsewhere. The literature on the link between lower turnover and training has found that off-the-job training is associated with higher turnover presumably because this type of training imparts more general skills.

Career commitment
When individuals are committed to the organisation, they are less willing to leave the company. This was found to be stronger for those highly committed to their careers. Employees with low career and organisational commitment had the highest turnover intentions because they did not care either about the company nor career.

Individuals with high career commitment and low organisational commitment also tend to leave because they do not believe that the organisation can satisfy their career needs or goals. This is consistent with previous research that high career committers consider leaving the company if development opportunities are not provided by the organisation.

In Part 2 of this article we will review recruitment and retention strategies that reduce turnover.

Craig Missell is the director of Match 2 Personnel. Match2 is about measurable results & cultural fit, not just solutions & job descriptions.

1 comment :

Anonymous said...

can we get some info on recruitment fee's and why those charges are so high?


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