When employees leave a company and have to be replaced, that's called turnover. A certain amount of turnover is unavoidable, but too much can ruin a company. Some employees will always retire, move away, go back to school, or leave the workforce. This level of turnover is not only unavoidable, it can be beneficial. It brings new people into the organization with new ideas and a fresh perspective. Types Of Turnover
The two general types of turnover are voluntary and involuntary. Voluntary turnover is when the employee chooses to leave for whatever reason. Involuntary turnover is caused by layoffs and similar actions whAs a general rule, voluntary turnover is the measure used to discuss and compare employers. It is the type most directly affected by the front line supervisors. Involuntary turnover, caused by layoffs, can be a long-term result of high levels of voluntary turnover. ere the decision for an employee to leave is made by the company and not the employee. What Is Turnover Rate Turnover rate is a calculation of the number of employees who have left the company and it is expressed as a percentage of the total number of employees. Although turnover rate is usually calculated and reported as a percentage per year it can be for different periods. How To Calculate Turnover Rate3
You calculate the turnover rate by dividing the number of employees who left by the total number of employees at the beginning of the period. This number is expressed as a percentage. You can calculate voluntary turnover, involuntary turnover, and total turnover. For example, a company has 100 employees at the start of the year. During the year six employees quit and nine get let go in a layoff late in the year. The voluntary turnover rate for the year would be 6/100 or 6%. The involuntary turnover rate was 9/100 or 9%. The total turnover rate would be calculated as 15/100 or 15% because the six employees who left voluntarily and the nine who were laid off are added together. The definition of term “turnover” is being defined by Price is the ratio of the number of workers that quit and had to be replaced within a time period to the average number of workers. In simple terms, employee turnover is an action that an poor performer employee leaves the organizations and he or she will be replaced with another more skilled employee or when retired employee will be replaced by a younger one (Shamsuzzoha & Shumon, 2007). Frequently, managers use to refer turnover as the entire process that associated with the filling on a vacancy. When particular position was vacated, no matter it is voluntary or involuntarily, the new employee is needed to be hired and be trained. This replacement cycle is known as turnover (Hom & Griffeth, 1995). Voluntary and involuntary turnover of employees are involving cost of administrative on advertisement on vacancy, recruitment and selection, training and job search for the both firm and the employee (Cascio, 1991). Employee turnover is very costly as it requires different cost to take in account such as Other than that, cost on orientation and training after the process of selection for the new employees as well. There is no standard reason for why people leave the organization (Ongori, 2007). Employee turnover is the rotation of workers around the labor market, in between firms, jobs and occupations and also between the states of the employment and unemployment (Abassi & Hollman, 2000). There are few factors that caused employee turnover. There are, first, job related factors, second, voluntarily and involuntary turnover, and third, organizational factors. 126.96.36.199 Job related factors
From the past researchers (Peters, Bhagat, O’Connor, 1981; Bluedorn, 1982; Kramer, Callister & Turban, 1995; Saks, 1996; Kalliath & Beck, 2001) had researched on what determines people’s intention to quit by investigating the most possible derivation of employees’ intention to quit. However, there had been a little consistency in findings due to the diversity of employed (Ongori, 2007). There is few reason why people quit from one organization to another organization it is because of the experiencing job related stress (job stress), factors that lead to job related stress (stressors), lack of commitment inside the organization, and also job dissatisfaction that make employees to quit from the organization (Firth, David, Kathleen, & Claude, 2007). This showed that these are individual decision to leave the organizations. Furthermore, due to personal reason which makes individual to quit. Whereby, an individual sense of powerless in an organization. According to Mano and Shay (2004), argue that employee quit from the organization is due to economic reason. Economic reason is use to predict employee turnover in labor market. If an organizations which is large and able to provide employees higher wages and better benefits, it will able to ensure the employee is attach with the organizations (Idson & Feaster, 1990). Role stressor will also lead to employee’s turnover. Role ambiguity refers to what others expect employees to perform on the job and what employees felt they should do on the job. This will cause uncertainty on what an individual’s role in the organizations. The result on uncertainty on job will be misunderstanding what was being expected, with the expectations or the perception of an employee towards the job will be different (Ongori, 2007). Due to the unclear expectation, lack of consensus, with the extensive of job pressure may cause an employee felt that the ignorance from the job and less satisfied with the job and careers. It will lead to less committed to their organizations and eventually the intention of leaving the organization is higher (Tor, Guinmaraes, & Owen, 1997). If roles of employees are not clearly stated by the management, it would accelerate the degree of employee quitting from their job (Ongori, 2007). 188.8.131.52 Voluntarily and Involuntary turnover
Turnover in organization can be divided in to two, voluntary and involuntary turnover. Voluntary turnover is an employee’s own intention to leave the organizations, whereby involuntary turnover were the employees had no choice in their termination (Mbah & Ikemefuna, 2012). Voluntary turnover may involve with the individual’s work selection opportunity and with the job hunting behaviors. It was use as the most direct independent variable to employee behavior, and also dependent variable which a numerous predetermined variables which affect employee voluntary turnover factors (Allen & Griffeth, 1999; Price, 1977). However, involuntary turnover where the employee had to force to stop their work in organizations, the reason maybe with the long term sickness, death, moving overseas, or employer-initiated termination (Ongori, 2007). There are some employees who needed to give extra care on their children or aged relatives and caused involuntary turnover. Nowadays, the reason is no longer consider as involuntary turnover as because of government regulations and company policies had created chance for the employees to return back to work or with more flexible working period (Simon & Kristian, 2007). 184.108.40.206 Organization’s factors
Organizational instability had been shown that will have high degree of high turnover. Employees are more likely to stay when there is predictable work environment and vice versa (Zuber, 2001). An organization where had high level of inefficiency there will also have high level of employee turnover (Alexander, Boom, Nuchols, 1994). Therefore, employees will tend to look after which organizations is more stable compare with the organizations which are not. It is because in a stable organization, they would able to predict their career advancement (Ongori, 2007). By using quantitative approach to manage the employees will leads to labor turnover. Due to adopting cost oriented approach to employment cost will increase the labor turnover (Simon & Kristian, 2007). With the minimizing the cost, it will only lead to high turnover rate in organizations (Ongori, 2007). Thus, management should not use quantitative approach in managing its staff. Furthermore, according to Labov (1997) said that organization with strong communication system will have lower turnover rate. It is because employees have a strong need to be informed in their job. If an employee’s position is involving in making decision, they are less likely to leave the organizations. Employees which are not openness in sharing information, employee empowerment the chances of continuity of employees will be minimal (Magner, Welker, & Johnson, 1996). Besides that, organization with poor personnel policies, recruitment policies, supervisory practices, or grievance procedures will cause employees decides to quit (Ongori, 2007). According to Griffeth, Hom, Gaertner (2000), said that pay and pay-related variable had the modest effect on turnover. Their analysis included examine of relationship between pay, person’s performance and turnover. It was being concluded that when high performers are not rewarded fairly, there will be high turnover rate. 2.1.3 Job satisfaction
Job satisfaction is regard to one’s feeling towards their job and different aspects on their job in the organizations. Job satisfaction can be influenced by variety of factors, such as pay practice, relationships between their supervisors, quality of the physical environment in their work (Hamdia & Tooksoon, 2011). In addition, job satisfaction is generally believed that, higher job satisfaction is associated with the increases of productivity, lower absenteeism, and with the lower rate of employee turnover (Hackman & Oldham, 1975). Some workers manifest the intention to quit via decrease of performance or increased absenteeism (Firth, Mellir, Moore & Loquet, 2004). Low absenteeism is linked with high job satisfaction; meanwhile high turnover and absenteeism are associated to relate to job dissatisfaction (Saifuddin, Hongkraclent & Sermril, 2008). The Mobley model (Lee, 1988) had explain the process of how job dissatisfaction can lead to employee turnover. The model explained how an employee normally experiences seven sequential and intermediate stages in between job dissatisfaction and turnover. Mobley theorized that job dissatisfaction leads an employee (1) to think about quitting the current job, which maybe helps the employee to lead in. (2) To evaluate the expected usefulness on searching for another job with the cost that associated with quitting the current job. From the evaluation, (3) intention to look after alternative jobs may appear, which leads the employees (4) to intend of searching for alternative jobs and (5) to the evaluation of the consensus of any specific alternatives. Base on the second evaluation, employee would (6) compare the new alternatives with the current job which it can lead to (7) intention to quit, and eventually lead to actual employee turnover. Thus, it is very important that not only to the individual worker but also with the survival of the organizations. It is to prevent employees to felt to depart from the organization (Zafir, Radzuan & Fazilah, 2011).