Turnover & Performance

The link among turnover and organizational performance isn’t clear (though it would look understandable that sacking an unskilled employee would be a positive). 

The problem is that what might be a positive in individual cases becomes a negative when the employer repeatedly loses employees.

A study accomplishes that all turnover, voluntary or involuntary, is linked with reduced organizational performance. The researchers say, “Organizations must recognize that when turnover rates rise, their workforce and financial performances are at risk. They should search for strategies to mitigate and eliminate turnover, recognizing that lower turnover [of all types] is always better.”

A study evaluated the tangible and intangible costs of turnover in a call center with 31 agents and 4 supervisors. Tangible costs related with an employee’s leaving included the costs of recruiting, screening, interviewing, and testing applicants, as well as the cost of wages while the new employee was oriented and trained. Intangible costs included the cost of lost productivity for the new agent (who is less productive at first), the cost of rework for the new agent’s errors, and the supervisory cost for coaching the new agent.

The researchers’ calculations estimated the cost of an agent leaving at about $21,551. This call center averaged

18.6 vacancies per year (about a 60% turnover rate). Therefore, the researchers estimated the total annual cost of agent turnover at $400,853. Taking steps to cut this turnover rate in, say, half could save this firm about $200,000 per year.

References: -

Sabry, M. (2017). Managing employee turnover and Retention. [online] Available at: https://mohamed-sabry.com/blog/managing-employee-turnover-and-retention/ [Accessed 23 Feb. 2020].