Employee turnover : reasons and responses

Abstract

Employee turnover has always been an important topic for the management researchers and practitioners alike because it influences the welfare of employers and employees. Numerous studies have focused on the topic of employee turnover across more than a century, and offered rich findings regarding the reasons, boundary conditions, processes, and influences of employee turnover, and managerial levers to mitigate turnover. However, the more recent context of China and the Covid-19 pandemic have shaped the phenomenon of employee turnover from many perspectives, possibly challenging the existing findings in the literature. In this dissertation, I study the reasons and possible functional managerial responses of employee turnover both theoretically and empirically. I first analyze how the recent changes in the working environment and the special Chinese business context call for updated and exploratory research on the reasons for employee turnover. Then I review a number of key theoretical perspectives that have been used to study employee turnover and that have the potential to add value to understand employee turnover. My review indicates that the Voluntary Turnover Model has been fairly successful and influential in guiding the research on turnover; in addition, integrating the theory of planned behavior and the research on attitude change can add new values in understanding the phenomenon, especially in the new context of Chinese business and Covid-19 pandemic. Based on the existing literature, I realize that exploring the fundamental reasons for employee turnover in the current Chinese business context is valuable. That constitutes my Study 1, in which I use concept mapping to explore the exit interviews of 176 leaving employees. Then, integrating the findings from this explorative study and the literature, I conduct two quantitative studies. The first quantitative study examines to what extent pay to employees can influence their actual turnover, and I use a large number of actual pay slips of employees across four years and recorded the actual turnover of a proportion of them. The results indicate that pay can reduce the probability of employee turnover but the corresponding labor cost to the organizations is also tremendous. The second quantitative study examines to what extent leaders can shape the frontline leaders’ characteristics to influence the employees’ turnover intention. The results indicate that in general, the employees’ turnover intention stays at certain level to some degree, but their leaders can shape the stability based on their perceived warmth and competence. In this dissertation, I have the following theoretical and empirical contributions. In theory, I combined VTM and TPB theories to study employee turnover. Meanwhile, I used a large data set on employee real pay and actual turnover rate, and quantified how much pay should be raised to reduce employee turnover rate. Empirically, through data analysis, I found the impact of pay on turnover, as well as the impact of leadership characteristics of managers and personal characteristics of employees on employees' turnover intention. Putting together, my dissertation offers rich and deep descriptions of the employee turnover nowadays, and offers some practical prescriptions to managers to deal with employee turnover. Specifically, executives need to pay attention to the individual characteristics that likely influence their turnover probability, increase pay levels to some important position’s incumbents, and improve the leadership skills of the managers to make the employees feel better on a daily basis.