What is employee turnover?

Every employee has a certain value for an organisation. Depending on this value a distinction can be made between functional (desired) and dysfunctional (undesired) turnover.

Functional employee turnover

An employee leaves, and the organisation does not see this as a bad thing. For example, the employee who digs in his heels and consequently contributes little to the organisation's performance. The organisation will not be sorry to see him go, and his departure will make room for someone who will do his bit to contribute to the organisation's success. This is functional turnover.

turn-ov-er (n.)
1 the number of workers employed by a firm in a given period to replace those who have left

Many factors influence employee turnover, such as satisfaction with the work and career, the degree of commitment, stress caused by work-related factors, learning and development opportunities and so on. Employee commitment, satisfaction and loyalty appear to be the greatest predictors of staff turnover.1

Dysfunctional employee turnover

Employees leave even though the organisation would like to retain them. Dysfunctional employee turnover does not always lie within the organisation's sphere of influence. Some employees leave the organisation because their partner finds a job abroad or because they want to start a family. These employees can still be committed to and satisfied with the organisation, but insurmountable reasons compel them to leave.

The importance of turnover management

Employee turnover is a problem for many organisations. Turnover is generally accompanied by high costs. On the one hand high costs arise because your organisation has to invest money in educating and training employees.2 On the other hand turnover is accompanied by costs because your organisation has to find replacements.

As an organisation it is important to retain your employees, particularly if they are very knowledgeable or work hard to take your organisation to the next level. Of course your organisation wants to retain these so-called star employees. If they leave, you will suffer from dysfunctional turnover.3 Resistance to dysfunctional turnover should be of the highest priority.

  1. Igbaria, M. and Greenhaus, J.H. (1992), Determinants of MIS Employees' Turnover Structural Equation Model, Communications of the ACM, 35, 35-49
  2. Van Dick, R. et al (2004), Should I Stay or Should I Go? Explaining Turnover Intentions with Organizational Identification and Job Satisfaction, British Journal of Management, 15, 351-360
  3. Sturman, M.C., Trevor C.O., Boudreau, J.W. and Gerhart, B. (2003) Is it worth it to Win the Talent War? Evaluating the Utility of Performance, Personnel Psychology, 56, 997-1035

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