2.2 TURNOVER
This section of the study explores the concept and theories of turnover, its impact of organizational productivity, and the calculation formula.
2.2.1 Definition of Concept
Organizations with a “healthy culture” are characterized by high productivity, efficiency, and low turnover because leaders embrace diversity, equality, respect, fairness, and human capacity development (Uyar et al, 2022). Employees feel enthusiastic to contribute towards organizational growth and they are proud to identify with the company. Leaders with a strong sense of purpose and direction also establish responsive communication channels, implement employee-centred policies, encourage individual and group performance, and provide incentives to help everyone achieve their career goals within the organization (Xu et al, 2022).
Employee turnover is the number of workers who leave an organization within a given period—usually one year. High turnover is an indication of an organization’s inability to address internal and external challenges. It is also a reflection of an organization’s work culture (Rynarzewska, 2019).
Turnover is very expensive. A 2022 Gallup review claims that companies spend almost twice the salary of employee being replaced to hire another. Studies also show that workers leaving a company are often searching for organizations with work-life balance, career growth opportunities, better benefits, higher salaries—and to escape from a toxic work environment. So, HR management issues are crucial to organizational performance and cannot be taken for granted. In this era of ‘Great Resignation,’ businesses are applying advanced tools or metrics to compare turnover rates with national and industry-specific benchmarks (Tkachenko et al, 2022).
2.2.2 Impact of Employee Turnover
Rynarzewska (2019) and Uyar et al (2022) agree that high turnover in organizations may result in the following:
- Dissatisfaction, low morale, and less engagement among the remaining staff who may quit immediately they find better options.
- Lack of cohesiveness due to doubts on team’s capabilities.
- Lack of trust in the managers, unwillingness to identify with the organization, and loss of interest in core corporate values.
- Resistance to change (Bibi et al, 2028).