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Improving dynamics or destroying human capital? The nexus between excess turnover and performance

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Abstract

The flow of employees leaving the organization and the necessity of finding and training suitable replacements is an important issue in the day-to-day management of organizations. However, the body of research empirically examining the exact effects of such employee flows on the performance of organizations remains relatively underdeveloped. This article aims to increase our understanding of this topic by unraveling the link between excess employee turnover—a concept incorporating both the entry and exit of employees—and the performance of US public sector organizations. The results indicate that a linear negative relationship between excess employee turnover and performance surfaces in a time-lagged manner. This finding first of all suggests that human resource management should continue to devote attention to turnover and employee retention, and secondly implies that researchers should specifically take into account potential medium to long-term effects when studying excess turnover.

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Notes

  1. The term excess employee turnover comes from the fact that employee turnover due to employee replacement occurs in excess of the employee turnover that would be necessary due to a decline or an increase in employment size (Murmann 2015).

  2. For more information on the survey, see: http://www.fedview.opm.gov/.

  3. Available at: www.fedscope.opm.gov).

  4. The Cronbach’s alpha for these items equals 0.9496, indicating a strong degree of reliability. When included in a factor analysis (using a polychoric matrix in order to account for the ordinal nature of the included items), all items load strongly onto one factor, explaining 62% of the variance.

  5. See Grinza (2014) for a detailed discussion of the advantages of System-GMM in the context of excess employee turnover and performance. For more information on the System-GMM model in general, see Roodman (2009).

  6. Note that excess employee turnover is measured between April (yeart−1) and March (yeart) while organizational performance is measured in April (yeart). The lagged version of excess employee turnover refers to time period April (yeart−2) and March (yeart−1) while organizational performance is still measured in April (yeart).

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Funding

Fonds voor Wetenschappelijk Onderzoek Vlaanderen

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Authors and Affiliations

  1. Faculty of Social Sciences, Public Governance Institute, KU Leuven, Parkstraat 45 bus 3609, 3000, Leuven, Belgium

    Jan Wynen

  2. Faculty of Social Sciences, Department of Political Sciences, Research Group Public Administration & Management, UAntwerpen, Sint-Jacobstraat 2, 2000, Antwerp, Belgium

    Jan Wynen & Bjorn Kleizen

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  1. Jan Wynen
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  2. Bjorn Kleizen
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Correspondence to Jan Wynen.

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Additional information

Evidence from the U.S. Federal Government.

Appendix

Appendix

See Table 4.

Table 4 EFA results
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Wynen, J., Kleizen, B. Improving dynamics or destroying human capital? The nexus between excess turnover and performance. Rev Manag Sci 13, 303–325 (2019). https://doi.org/10.1007/s11846-017-0249-9

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