Employee Turnover

Two Categories of Turnover

There are two categories of employee turnover: involuntary turnover and voluntary turnover. Involuntary turnover occurs when the organization takes the initiative to terminate or discharge an employee through firing, layoff, down-sizing, or rightsizing (reorganizing employees to improve efficiency). Firings normally occur as the result of poor job performance or misconduct, whereas other forms of involuntary turnover are initiated for strategic or economic reasons. Managing involuntary turnover can be a complex process because of the legal, ethical, and public relations problems that often arise when organizations engage in massive layoffs, facility closures, or relocations.

Voluntary turnover occurs when an employee takes the initiative to leave the organization. Examples of voluntary turnover include resignations and retirement. Most resignations occur when an employee leaves an organization because of better employment prospects elsewhere. Because voluntary turnover usually has a more detrimental impact on the organization, it is not surprising that most research has focused on voluntary rather than on involuntary turnover. There are instances, however, when voluntary turnover serves a useful purpose, such as when a marginally performing employee resigns.

The Dynamics of Voluntary Turnover

The literature on voluntary turnover describes the turnover process in terms of the employee rationally examining employment alternatives and selecting the one that provides the greatest economic and social utility. In reality, employees often compare job alternatives, and make the decision to leave an organization, based on incomplete or erroneous information. To the extent that this occurs, voluntary turnover harms both employee and employer.

Voluntary turnover is most likely to occur when two conditions are met: The employee (a) must want to leave the organization and (b) must have the ability to leave the organization.

The desire to leave an organization is a function of an employee's level of job satisfaction, life satisfaction, and commitment to the organization. A study of nurses, medical assistants, and laboratory technicians, for example, found that those who were dissatisfied with their jobs but had high overall life satisfaction were the most likely to resign (Judge, 1993). Job and life satisfaction, in turn, are a function of a multitude of factors such as pay, work environment, coworkers, family circumstances, and individual personality traits. Some employees quit their jobs even when their level of job satisfaction is high. This situation might occur, for example, when the employee desires to change careers, spend more time with family, increase leisure time, or accommodate a spouse's job change.

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