¶ … businesses, in particular because there is a productivity drop that occurs when an experienced worker is replaced by an inexperienced one. What happens is that the company will see productivity drop, and this can affect the financial results, so the more turnover there is the worse the financial impact will be. If the turnover rate is high enough, as occurs in poorly-run establishments, then it becomes the blind leading the blind and the organization's effectiveness is likely to be plummet. The influences of turnover include perceived lack of procedural justice, lower than market compensation, and a perceived lack of a career pathway. Employees want to feel that there is mutual commitment between them and the organization, but they also want to feel that they are working towards their life goals, and that the company is a place where they can do that. Providing such a vision is important to employee engagement. Socialization into the company is also important, and that begins with the onboarding process, so there is significant role that HRM plays in building this employee engagement.

Introduction

Labor turnover is a significant problem for any company, but can be very expensive in some. While there are some benefits to turnover, such as the opportunity to bring in fresh ideas to an organization, there are significant negatives to turnover as well. When somebody leaves, they were usually performing at a level that will be difficult to replace -- fully productive workers can almost never be replaced without a dip in productivity (Silva & Toledo, 2009). Onboarding new people takes time to identify the right people, and then it takes time to train them and get them up to speed. There is institutional knowledge that is lost with turnover. The cost in terms of lost productivity can be high, and if turnover is high enough then there is also disruption in the organizational culture as well. Therefore, most organizations seek to limit turnover. But beyond that, high turnover is generally viewed as a sign of dissatisfaction within the company -- either it is not paying enough for the market, or it is not offering a positive work atmosphere. So turnover is not just a cost and productivity problem, but it is also a symptom of bigger problems within the company. This is especially the case when the turnover occurs at managerial levels -- at higher levels turnover can be incredibly expensive. As such, organizations have developed a number of techniques to try to limit turnover.

Definition of the Problem

Turnover is the aggregate loss of workers, usually evaluated in terms of turnover percentage of the labor force per year. Turnover reflects people leaving the organization. Most companies will experience some turnover naturally, just in terms of people retiring, moving or otherwise pursuing different opportunities. A low turnover rate is always going to happen. But turnover has costs, so anything more than this baseline natural rate is generally considered to be a problem. One of the biggest issues is that fully productive workers, when they leave, must be replaced by new workers who are not as productive. This decrease in productivity will depend on the positions being lost. In general, long-time employees have a higher productivity rate, as there is a lot of institutional knowledge that they possess. Such workers can be very difficult to replace. Further, they know the organizational culture, so there are fewer issues there as well, whereas a new hire may or may not fit well into the culture, again leading to some risk for the company.

There have been a number of studies that have sought to quantify the costs associated with turnover. These costs depend on the job, and how easy it is to learn the job. High-skilled workers are harder to replace than low-skilled workers, for example. But there is broad agreement that higher rates of turnover are associated with higher costs, and weaker financial performance (Huselid, 1995). There is also evidence that human resource management practices (HRM) are one of the influencers on turnover (Ibid).

Influences of Turnover

There are several different factors that can influence the turnover rate in the organization. Engagement is one of the most common reasons for workers forming an intention to leave. When they are not engaged, they are more likely to leave a company. Thus, if there is a disconnect between the culture of the company and the individual, or if the employee does not feel a sense of contribution, or otherwise if the employee does not feel that...

Faith in management is another factor -- when workers do not feel that they trust their superiors, or that their superiors are good at their jobs, then workers tend to become increasingly disengaged, perhaps because they do not believe in the direction of the company (Johnsrud & Rosser, 2002).
Turnover intentions are also influenced by perceptions of organizational justice. Employees want to feel that they are treated fairly, and equally to others. This can mean different things to different people, of course. For example, some workers look at external fairness -- are they being paid in line with the market, or more colloquially if the worker feels that the grass is greener somewhere else, then the worker will go somewhere else. Procedural justice and outcome justice can both be perceived by employees, and the former is particularly important. For example, if an employee sees that somebody less qualified is promoted to a higher position, that sense of lack of procedural justice will contribute to employee disengagement. Everybody wants to know that their relationship with the company is healthy, so procedural justice perceptions have been linked to intention to leave (Pare & Tremblay, 2007). People want to be on a winning team, they want to feel like they are making a contribution to that team and they want to feel that their contribution is welcomed.

Dealing with turnover at the HRM level also means understanding that there are different types of turnover. Impulsive turnover reflects people who just quit, without another job offer in hand nor a turnover plan. Comparison quitters are those with a better offer in hand -- they know the marketplace and feel that their value might be higher somewhere else, and have explored those options. The preplanned quitters have a long-term life plan, and quitting was always part of that plan. Satisficing quitters report better jobs offers, poor management, work responsibilities and schedules are reasons for quitting --they are seeking a different compromise in their work agreements (Maertz & Kmitta, 2012).

Solutions

There are a few different solutions that HRM can implement. First, a company that wants to have the best people and avoid high turnover costs should make a point to keep up-to-date on the market conditions for its positions, as this will avoid comparison quitters leaving. If people do not feel that they can get a better deal elsewhere, they will have no reason to leave. Beyond that, most of the issues leading to turnover intention relate to organizational engagement, or lack thereof. So there are few different things that can be done at the HRM level to encourage people to stay.

It begins with the onboarding process. The greater the degree to which newcomers are socialized into the organization, the more likely they will be to have higher engagement levels. Higher levels of socialization make employees feel more comfortable with the culture, but also with their own commitment and to the mission of the organization. HRM needs to continue to help build a culture whereby newcomers are socialized early and often, but then continue this path of socialization as a matter of organizational culture, because on-the-job embeddedness is also negatively associated with turnover intention (Allen, 2006).

Mentorship programs and career pathways are also important. HRM can contribute to both of these. Employees like to feel that there is a path for them, should they choose to follow it. When a person is in an organization, but feels that there is a ceiling placed on their upward mobility, they are likely to become disengaged. If someone feels that he/she has been pigeonholed and simply will not have opportunity, that is someone more likely to leave. Human resources personnel can work with people to set out their career pathway, so that people have a sense of what they need to do in order to get ahead in the company, should they choose to do so. This is an important part of building engagement, because it shows that the company has an interest in your career as well, and when that is the case an employee is much more likely to see a long-term future there. Mentorship is also valuable, for this, because again it shows a higher level of organizational commitment to somebody's career. Mentorship is costly, so may not be used for all employees, but it has a high value for the best people, to ensure that…