Managing the Impact of Employee Turnover on Performance: The Role of Process Conformance

Abstract

W e examine the impact of employee turnover on operating performance in settings that require high levels of knowledge exploitation. Using 48 months of turnover data from U.S. stores of a major retail chain, we find that, on average, employee turnover is associated with decreased performance, as measured by profit margin and customer service. The effect of turnover on performance, however, is mitigated by the nature of management at the store level. The particular aspect of management on which we focus is process conformance-the extent to which managers aim to reduce variation in store operations in accordance with a set of prescribed standards for task performance. At high-process-conformance stores, managers use discipline in implementing standardized policies and procedures, whereas at low-process-conformance stores, managers tolerate deviations from these standards. We find that increasing turnover does not have a negative effect on store performance at high-process-conformance stores; at low-process-conformance stores, the negative effect of turnover is pronounced. Our results suggest that, in settings where performance depends on the repetition of known tasks, managers can reduce turnover's effect by imposing process discipline through standard operating procedures.

Human Resources Turnover as an Asset Acquisition, Accumulation and Divesture Process

“…Specifically, we study 15 UK listed football clubs in order to assess the effect on shareholder wealth of the 1 See, for example, the arguments and papers cited by Davidson, Worrell and Fox (1996), Panayotopoulou, Bourantas & Papalexandris (2003), and Pfeffer (1996). Most empirical research has concentrated on the effect of human resource aspects that can be easily measured, such as formal education, training, labor quality, managerial skills, satisfaction, eg., see Edmans (2007), Griliches and Regev (1995), Hitt, Bierman, Shimizu & Kochhar (2001), Lynch and Black (1995) and Ton and Huckman (2008). Research on the effects of human capital on equity value has been very limited (see Abdel-khalik, 2003, inter alia). purchase, sale and lending of players.…”

A Review of Employees Collective Turnover Research and Prospects

“…Many empirical studies support this view. For example, Ton and Huckman found that collective turnover will bring about a decline in organizational profit margins [11]. Shaw et al found that the turnover rate of each unit will lead to a decline in sales of about $1500 per unit [12].…”

Organizational nostalgia lowers turnover intentions by increasing work meaning: The moderating role of burnout.

“…Indeed, overall profits fall following employee departure (Ton & Huckman, 2008). As such, understanding the causes of turnover and retaining employees are highly relevant to organizational health.…”

“…Here, we focus on a particularly costly outcome, namely, turnover. Turnover is costly, because investments in human resources, such as training or expertise, are lost to the organization when employees decide to leave (Ton & Huckman, 2008;Van Dick et al, 2004).…”

“…Here, we focus on a particularly costly outcome, namely, turnover. Turnover is costly, because investments in human resources, such as training or expertise, are lost to the organization when employees decide to leave (Ton & Huckman, 2008;Van Dick et al, 2004).Moreover, turnover impacts those who stay behind, as team productivity decreases (Argote, Insko, Yovetich, & Romero, 1995) and job satisfaction weakens (Krackhardt & Porter, 1985).Indeed, overall profits fall following employee departure (Ton & Huckman, 2008). As such, understanding the causes of turnover and retaining employees are highly relevant to organizational health.…”