Turnover & Retention

New Revelations in Turnover

Turnover has long been considered to be detrimental to an organization. It has been assumed that, regardless of the job, no turnover is optimal, and organizational performance (profitability, sales, etc.) suffers as turnover increases. In spite of the aforementioned longstanding view of turnover, researchers have begun to speculate that, depending on the job and type of organization, turnover can actually be helpful.

Why might some turnover be helpful?

Most intuitively, turnover can help the organization by removing lower performers and making room for potential star performers. This can occur as a result of the organization terminating poor performers, or poor performers becoming unhappy with their lack of success and quitting. A less often considered benefit of turnover is to help an organization maintain an appropriately sized workforce as a response to market changes. This can allow organizations to grow and shrink their workforce at times that are most advantageous.

Turnover findings

Sales assistant turnover rates of a large retail chain in the United Kingdom were compared to store sales figures to determine the optimal level of turnover. The staff in the organization consisted of full-time sales associates and part-time sales associates. Full-time sales associates (FTSAs) help with daily store operations and have the potential for advancement to management whereas part-time sales associates (PTSAs) typically do not intend to remain with the company long-term.  The FTSAs receive more training and are more integral to the success of a store. Researchers found that any turnover, regardless of the amount, was detrimental to a store’s performance when the person leaving was a FTSA. However, the relationship was more complex with PTSAs; the PTSA turnover rate that yielded the highest store sales figures was about 30%, with store sales performance decreasing at both higher and lower rates. One likely explanation for this lies in the likelihood that the lack of career growth opportunities for PTSAs may reduce engagement.

Practical Implications

While it is important to remember that theories of optimal turnover rates are still in their infancy, large organizations should examine their performance numbers closely to determine the optimal level of turnover. This can be accomplished with a detailed statistical comparison of the success of individual stores in relation to store turnover rates. Knowing your organization’s optimal turnover rate can be very helpful in determining if further turnover reduction strategies would be appropriate for the organization.

Interpretation by:

David Daly

DeGarmo Group

This was a summary of the research and practice implications from: Siebert, W. S., & Zubanov, N. (2009). Searching for the optimal level of employee turnover: A study of a large U.K. retail organization. Academy of Management Journal, 52, 294-313.