Employee Turnover in Enterprises: A Critical Approach
Introduction
Employee turnover, or employees leaving the enterprise, and new employees coming in a
replacement is normal and an inevitable part of any enterprise The employee turnover rate
refers to the ratio of the number of employees leaving an enterprise vis-a-vis the total
number of employees, in a year. Such employee turnover may be either voluntary or
involuntary. Voluntary turnover is the employee quitting on her own, for greener pastures,
or owing to any personal issues. Involuntary turnover is when the employer lets go of the
employee, for any reason, but mostly because the business faces a downturn and can no
longer afford to retain the employee.
Such employee turnover is both good and bad for the enterprise, depending on the specific
circumstances surrounding the enterprise at the time the turnover takes place.
The Advantages of Employee Turnover
Conventionally, enterprises regarded employees leaving them a bad sign, and worked to
reduce employee turnover. In a traditional work environment, where stability is preferred, a
well-entrenched worker, familiar with his role, would be highly productive and conversant.
Replacing him with a new employee means not just the recruitment costs, but also indirect
losses to training the new employee, and loss of productivity as the employee goes through
the learning curve. Deloitte estimates enterprises having to shell out anywhere between six
to nine months’ of the employee’s salary as recruitment costs. When the turnover ratio is
high, the cost adds up and can sap the profitability of the enterprise. As far as the learning
curve goes, the Society for Human Resource Management estimates a new employee to take
up to two years to reach the productivity levels of a well-entrenched employee he replaces.
However, today’s business environment has changed drastically in the past. The business
environment is extremely fluid and fast-paced. Change is the order of the day, with new
technologies, systems, and paradigms replaced older ones. Unless the business is willing to
embrace change, improvise, and go out of their to seize opportunities in the wake of the
changed business realities, they would be left out of the race. With flexibility and change the
key requirements of the day, businesses may actually be better off with new employees who
would readily try something new. Incumbent employees would have to go through a painful
change process, or an “unfreezing” process, according to Kurt Lewin’s time-tested change
management theory. New employees also come with added vigour and energy, and a
motivation to prove something. They can easily be motivated by the lure of rewards which
may no longer appeal to incumbent employees.
How to Control Employee Turnover Rates?
Introduction
Employee turnover, or employees leaving the enterprise, and new employees coming in a
replacement is normal and an inevitable part of any enterprise The employee turnover rate
refers to the ratio of the number of employees leaving an enterprise vis-a-vis the total
number of employees, in a year. Such employee turnover may be either voluntary or
involuntary. Voluntary turnover is the employee quitting on her own, for greener pastures,
or owing to any personal issues. Involuntary turnover is when the employer lets go of the
employee, for any reason, but mostly because the business faces a downturn and can no
longer afford to retain the employee.
Such employee turnover is both good and bad for the enterprise, depending on the specific
circumstances surrounding the enterprise at the time the turnover takes place.
The Advantages of Employee Turnover
Conventionally, enterprises regarded employees leaving them a bad sign, and worked to
reduce employee turnover. In a traditional work environment, where stability is preferred, a
well-entrenched worker, familiar with his role, would be highly productive and conversant.
Replacing him with a new employee means not just the recruitment costs, but also indirect
losses to training the new employee, and loss of productivity as the employee goes through
the learning curve. Deloitte estimates enterprises having to shell out anywhere between six
to nine months’ of the employee’s salary as recruitment costs. When the turnover ratio is
high, the cost adds up and can sap the profitability of the enterprise. As far as the learning
curve goes, the Society for Human Resource Management estimates a new employee to take
up to two years to reach the productivity levels of a well-entrenched employee he replaces.
However, today’s business environment has changed drastically in the past. The business
environment is extremely fluid and fast-paced. Change is the order of the day, with new
technologies, systems, and paradigms replaced older ones. Unless the business is willing to
embrace change, improvise, and go out of their to seize opportunities in the wake of the
changed business realities, they would be left out of the race. With flexibility and change the
key requirements of the day, businesses may actually be better off with new employees who
would readily try something new. Incumbent employees would have to go through a painful
change process, or an “unfreezing” process, according to Kurt Lewin’s time-tested change
management theory. New employees also come with added vigour and energy, and a
motivation to prove something. They can easily be motivated by the lure of rewards which
may no longer appeal to incumbent employees.
How to Control Employee Turnover Rates?
