Turnover and Retention

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Main Body2
Excessive Turnover2
General Turnover2
Critical Employee Turnover3
Turnover in Low to Moderate Level3
Relationship between Turnover and Performance4
Employee Retention5
Job Satisfaction5


Following the process of globalization which is increasingly developing, consequent fierce competition brings about frequent phenomenon of turnover in organizations (Liu et al., 2011). According to the statistic data that showed by Meier and Hicklin (2007), the turnover rate of U.S. federal government was 16.1% from 2003 to 2004, Dutch temporary employment agencies was 14.2% in 2005 and trucking even reached 41% in 2005. Currently, employee turnover is still lacking of attention in many aspects, such that most previous researches were focused on the reasons of turnover, but paid less attention to the effect of turnover (Ton & Huckman, 2008). The emphasis in this essay is that high employee turnover damages organization performance for increasing cost and causing critical employee leaving, while moderate level of turnover benefits organization performance for improving innovation and motivation, employers should focus on enhancing employee’s job satisfaction and embeddedness for retaining their employees. This essay has four parts. In the first and second part of the essay, both effect of excessive turnover and moderate turnover would be discussed with focus on organizational performance. And then the relationship between turnover and performance will be showed. The final part of this work would discuss the two aspects of retention strategy and many specific methods would be given to employers.

Main Body

Excessive Turnover

General Turnover

Excessive employee turnover rate increase operating cost of organizations. According to the essay of Wright and Huang (2012), under a standardized formula for the employee samples whose yearly salary are above 100,000 dollars, the potential cost of turnover of each one is estimated to the range from 1.5 to 2.5 times. Specifically, turnover leads to understaffed, so companies need to conduct a new recruitment for replacement of employees which companies have to devote substantial resources (Meier & Hicklin, 2007). According to one study (Hale, 1998) that mentioned in the essay of Ramlall (2003), the recruiting cost of one regular position is about half to 60% of the salary of a new employee in the first year, and even up to 100% for some particular positions (Ramlall, 2003). Significantly, it means that these new employees are unable to bring profit to employers but only increase costs of the organization in the short run.

Critical Employee Turnover

Especially, if one leaving the organization is critical employee who has better performance than the general employee, there is a larger loss for companies than an ordinary one. High turnover rate which indicate a significant problem with low morale and competitiveness likely caused critical employee leaving (Swider et al., 2011; Ramlall, 2003; Meier & Hicklin, 2007). Fiz-enz (1997) indicates that each one critical employee leaves the organization means the company loses about 100,000 dollars (Ramlall, 2003). Furthermore, the loss of critical employees also leads to the loss of their accumulated experience and deep knowledge, which have become essential components in existing operating routines that compose the organizational structure and the length of service (Ramlall, 2003; Ton & Huckman, 2008). In addition, it would cause demoralization to remaining employee due to additional work may be imposed on them and loss of respective colleagues (Ton & Huckman, 2008). Thus, managerial and professional employees as a kind of special precious property of companies, leave of them means reducing the...