High Employee Turnover
 

By Regina Vietmeyer and Sherri Dobbs

High Employee Turnover

High employee turnover is usually a symptom of deeper problems within an organization. Costs associated with turnover include financial costs to the organization, as well as costs in efficiency and effectiveness of services provided to its clients and customers. This report addresses the types of turnover, causes, and effects of turnover, and employers’ attempts in reduction and prevention of turnover.

Employee turnover is defined as the ratio of the number of workers that had to be replaced in a given time period to the average number of workers. It allows the organization to determine if there is a positive or negative trend in the organization. If turnover has increased over the previous year, the organization must decide what it can do to improve retention. The most commonly used formula for calculating turnover is the number of separations during the month, divided by the average number of employees during the month times 100.

The two types of turnover are voluntary and involuntary. Voluntary turnover are those employees who chose to leave the organization. Involuntary turnover are those employees who left due to poor performance or downsizing by the organization. Turnover calculations should include both voluntary and involuntary exits as well as overall turnover. Employee turnover effects the effective and efficient functioning of the organization.

Susan Heathfield in the article Retention in an Improving Job Market offers some reasons why employees begin looking for another job. Three reasons are better compensation and benefits, dissatisfaction with career development opportunities and readiness for a new experience. Retention efforts taken by employees to address these issues include tuition reimbursement, competitive paid time off for holidays and vacation, and competitive salaries.

Organizations must prevent and reduce turnover in today’s economy if they are to remain competitive. Some tips for reducing employee turnover include hiring the right person for the job, understanding employee motivation, and reading between the lines at the exit interview. Use of a well developed interview and selection process, and training managers on proper interview techniques are tools the organization can implement to improve retention. In most cases, prevention is the key to reducing employee turnover. The prevention process must begin with candidate selection. According to the recruitment agency, Profiles International, the correlation between good delivery in a job interview and the ability to do well on the job is just 14 percent. This equates to just one of seven individuals you hire. Further, according to Profiles International, when using both abilities and personality screening the organization hired the right person about 54% of the time. Hence, a good interview by a candidate does not equal a good or long-term relationship with an employee. Additional screening tools may be necessary to assure hiring the right individual for the job. Use of behavior-based questions allows the interviewer better understanding of the reaction of the candidate in specific job situations. Finding the right person and taking time to ensure a good fit are critical success factors.

According to motivation theorists, there are factors that influence an employee’s behavior on the job. According to Frederick Herzberg, developer of the Motivation-Hygiene Theory, “people have two distinct categories of needs.” Herzberg described these two categories as hygiene factors and motivation factors. Hygiene factors describe people’s environment and serve the primary function of preventing job dissatisfaction. The second category of needs he called “maintenance factors because they are never completely satisfied” (Hersey and Blanchard 67). Herzberg called them motivators. He felt that these needs motivated people to perform at a higher level.

Organizations must learn to provide the motivation through leadership initiatives. Necessary training must provide the employee guidance in the essential job functions the employee has to perform. A full understanding of the scope and goals of their areas of responsibility ensures success in the job. Department orientation provides more specifics and relevant information about the job duties and responsibilities.

Discovering the real cause of voluntary termination is difficult according to Darrell Zahorsky in the article Fighting Employee Turnover Costs. Most employees are not honest in the exit interview so reading between the lines is necessary. Employees typically use one of two reasons for leaving an organization. The two reasons are more pay and a better job. Finding the underlying cause of the turnover issue can be difficult to resolve. These exit interviews are necessary to provide quantifiable data on why employees are leaving the organization. Human resource personnel who conduct exit interviews must probe for the deeper meaning that underlies the employee’s decision to quit his job. Reducing turnover is difficult without understanding the reasons people leave the organization.
A second survey tool that could be valuable is an employee survey. Use of survey results often serves as a way to open discussions between management and employees. Historically, the dominant attachment theory focused on the correlation between turnover rates and job satisfaction, exploring the inverse relationship that existed between the employee’s satisfaction with the work they are doing and the likelihood that they would leave the organization. Employee surveys are a valuable tool and can give employees the opportunity to speak. It can also open lines of communication. Open communication eliminates many of the issues relating to low morale and finally to turnover among employees.

While employee surveys and exit interviews are traditionally methods used to reduce turnover; a new approach from Morehead Research and Development Group is gaining popularity in efforts to reduce turnover. The concept of job embeddedness theory is a new hypothesis circulating thorough the discipline of Industrial and Organizational Psychology. The theory is different from previous research that focuses on why employees leave an organization. Instead, it emphasizes the positive factors present in the workplace those create and stimulate higher rates of employee retention or why employees stay with an organization. Job embeddedness theory has three key dimensions that must be strong in an organization in order to maximize employee retention. The first dimension is links. Links represents the intensity and volume of interconnections an employee maintains with colleagues and groups throughout the organization.

The second dimension is fit. Fit captures an employee’s perceived compatibility and comfort with the work environment. The third dimension is sacrifice. Sacrifice reflects the employee’s calculation of the material and psychological cost of leaving the organization. Using the employee opinion survey to identify and predict areas of vulnerability for turnover allows the organization to take advantage of greater quantities of data than is available using the traditional exit survey process. While this philosophy is still in the infant stages, many organizations realize that if they can determine the areas of vulnerability they can make improvements that will prevent employees from leaving. The exit interview will still be important to determine why employees do exit the organization, but they will not be the only source of information available. Additionally, many organizations are moving to an internet based exit interview process in an effort to allow former employees easier accessibility to complete the survey and to reduce the risk a paper survey getting lost in the process of transition.

The goal of the Morehead research is to use employee survey items extracted from comprehensive employee opinion surveys to comprise a Turnover Vulnerability Index that reliably predicts the propensity for voluntary turnover within segments of the employee population. If successful, the Turnover Vulnerability Index could shift the research focus from why employees leave an organization to why they stay.

Another option for organizations fighting turnover that is worth consideration when hiring new employees is the cost of turnover. According to Profiles International, the total cost of employee turnover equals the costs of hiring new employees plus the cost of training new employees. An estimate of the cost of turnover is 50% to 200% of an employee’s salary. Costs associated with turnover include advertising, sign-on bonuses, time allowed for interviewing candidates, travel expenses, the cost of pre-employee assessments, and relocation cost. The costs of training new employees can be substantial in many organizations. These costs include training costs for employee and trainer, benefit set up, and training materials. In most organizations, there is a six-month to one-year training period before a new employee is fully trained and able to work independently.

According to Edward Lawler, a researcher and educator of motivation theory, the relationship between motivation and satisfaction are very different. He said that, “Motivation is influenced by forward-looking perceptions concerning the relationship between performance and rewards while satisfaction refers to people’s feelings about the rewards they have received.” Organizations have to be forward thinking in determining motivation factors for their workers if they are successful. Much of the motivation comes from leadership in the organization. Employees have to be satisfied about the rewards offered by the organization if they remain employed. Rewards desired by employees may include promotion opportunities, salary increases and benefits, and new challenges for personal growth.

Some organizations have taken innovative steps to retain good employees. According to Herzberg, “The assumption was that workers could gain more satisfaction at work if their jobs were enlarged….” Job enrichment includes upgrading responsibility, scope of work performed, and the challenge in the work itself. Many employers have used job enrichment techniques as suggested by Herzberg in an attempt to reduce employee turnover.

It is apparent by the research that to analyze turnover it is important to determine the main causes or reasons why people leave or stay and then generate possible interventions or solutions in order to reduce turnover. To prevent employees from leaving for a better job the organization should provide appropriate pay based on market averages, give managers the ability to counteroffer when key employees consider leaving the organization, and provide the necessary tools for employees to do their jobs. Another aspect of employee engagement is to promote relationships with their co-workers by providing teambuilding opportunities and partner connections that connect employees to the organization. A barrier to effective team building is allowing poor performing employees to stay on a team. It is important that managers eliminate the low performer to reduce the risk that high performers will resent the organization’s tolerance of poor performance and leave. In addition, providing a healthy work environment will go a long way to reduce the pressures and stress of the job making employees want to stay with the organization. Many organizations offer stress management training, time management training, and wellness programs to help eliminate or reduce the stress employees’ encounter in their jobs. More new age approaches to reducing stress on the job include nap times, workplace massage therapy and tele-counseling or tele-therapy to assist employees in dealing with more serious issues such as addiction or depression. While no program is going to completely eliminate turnover these programs have proven to be successful in reducing the turnover rate in many organizations.

Finally, many organizations are using the FISH Philosophy, based on Pike’s Place Fish Market in Seattle, Washington an effort to improve morale of employees and reduce turnover. The concept of having fun at work is a tool used by management to prevent turnover. Most employees received this philosophy of humor in the workplace in a positive manner.

Humor, when employed as a successful retention technique has been very successful, according to David Granirer in the article, Fun and the Bottom Line: Using Humor to Retain Employees. Granirer states that humor is a way of keeping up morale. Further, he says that organizations should encourage employees to control what they can. Humor is a method of taking control over one aspect of the situation they can control. Granirer suggests breaking out clown noses, Groucho glasses and other laughter inducing choices. Granirer went so far as to suggest that the boss come to work dressed as a chicken to promote laughter and fun at work.

In conclusion, there are many reasons why employees leave the workplace. Organizations must seek the true reasons by probing exit interviews. They must reduce or prevent turnover in order to remain competitive, efficient, and effective. The organization must use all interventions that will help employees to succeed on the job, cope with stresses and pressures of work, and increase the retention rate. Methods of coping should always include laughter, the best medicine, and a wonderful coping mechanism.

Works Cited
 

1. Employee Recruitment & Staffing. http://www.profilesinternational.com/
   SOL_Recruitment_and_Staffing.aspx

2. Granirer, David. Fun and the Bottom Line: Using Humor to Retain Employees.
   http://humanresources.about.com/od/employeeretention/a/humorretention.htm

3. Hersey, Paul, Kenneth Blanchard, and Dewey Johnson. Management of
   Organizational Behavior. New Jersey: Prentice-Hall, 2001.

4. Heathfield, Susan. Retention in an Improving Job Market. http://humanresources.about.com/cs/retention/a/turnover.htm

5. Rowlee, David, PhD. An Innovative Solution for Employee Turnover, The
   Importance of Understanding Why Employees Stay: Moving Beyond Traditional Exit Surveys, Morehead Consulting, 2006

6. Zahorsky, Darrell. Fighting Employee Turnover Costs. http://sbinformation.about.com/od/hiringfiring/a/reduceturnover.htm 

Bios

SHERRI DOBBS, RHIT, Quality Improvement Manager, Mental Health Cooperative, Nashville TN

Professional Experience QI/HIM Manager, Mental Health Cooperative
Report Management, Baptist Hospital
Manager, QuadraMed Transcription Services
Consultant, Pyramid Health Information Resources, CO
Consultant, Medical Center of Plano, TX
Consultant, Milwaukee County Jail, WI
Education A.A.S. Medical Record Science, Volunteer State Community College
Professional and Business Activities Credentialed as Registered Health Information Technician
Member: American Health Information Management Association
Member: Tennessee American Health Information Management Association
Member: Sharp Workgroup for Electronic Record Implementation

Sherri has served as Quality Improvement Manager at the Mental Health Cooperative since 1994. She is responsible for all quality projects at MHC. Previously, she was Manager in the HIM Department at Baptist Hospital for 5 ½ years. She enjoys her work in the HIM field; she has consulted in a variety of settings. As a consultant, she acted as HIM Director in facilities in Tennessee, Texas, Wisconsin, and Colorado. Sherri remains dedicated to lifelong learning. Her pursuit of the B.A. in Management and Human Relations from Trevecca Nazarene University culminates in December 2006. Sherri has dedicated her career to the development and creation of the electronic medical record to increase patients’ access to their records for continued care.

REGINA VIETMEYER, PHR, Human Resource Analyst, QHR Human Resource Client Services

Regina has been with QHR for 13 years and provides consulting services for QHR hospitals in the development of wage and salary programs. She has been successful in developing the Wage and Salary Administration ACCESS based software program used in QHR organizations to determine the implementation costs of new wage and salary structures. She also provides management training at the board, corporate and hospital management level on a variety of human resource topics. Regina manages the administration and consulting services for QHR’s Employee Opinion Survey for client organizations. She serves as the catalyst between the hospital and the survey vendor and provides consulting to the hospital in the development and implementation of their improvement plans. She manages the Human Resource Management National Conference and Human Resource Boot Camp programs for all QHR organizations.

Professional Experience Assistant to the Vice President of Marketing, Thomas Nelson Publishing
Education A.S., Business, Free Will Baptist Bible College
Professional and Business Activities Charter Member of QHR’s Toastmasters International Club
Designated as a Professional in Human Resources by the Society for Human Resource Management
Certified as a Human Resource Generalist by the Society for Human Resource Management
Member of the Society for Human Resource Management
Member of the American Society for Healthcare Human Resource Managers