1. What is Employee Turnover?

     1.1 Introduction

 What You Should Know about It and Why It Is So Much of a Big Issue in HRM.

Employee turnover in normal language merely refers to people moving out of the organization. The term is however more specific and strategic in the context of Human Resource Management (HRM). Turnover is not only the issue of departures; rather the flow of people over the borders of the organization, and what this flow tells us about culture and leadership and competitiveness.

The traditional definitions include those by Price, who explained employee turnover as the proportion of the members leaving within a particular period to the mean number of employees within the period (Price, 1977). As a calculation, a like turnover rate is typically determined by the HR departments of an organization: number of people who leave divided by the average number of individuals, in percentage. This may initially seem a mere statistic but decades of research have indicated that turnover has a close relationship with performance, costs and talent management (Ongori, 2007; Al-Suraihi et al., 2021).

 

1.2  Various categories of employee turnover.

 

The modern HRM does not consider turnover to be homogeneous. Several types are distinguished both in research and practice.

The first difference is voluntary and involuntary turnover. Voluntary turnover occurs when employees voluntarily choose to exit the company as in the case of a better job, to avoid stress or study abroad. Involuntary turnover takes place when an organisation causes the separation, which can be termed as in performance, restructuring, or redundancy (Mobley, 1982; Ongori, 2007). Strategically, voluntary turnover is normally more disturbing in that it indicates that the organisation is not perceived by the employees as the right place to invest their career anymore.

The second difference is that of functional and dysfunctional turnover. When poor performers or individuals with poor fit exit the organisation, a functional turnover takes place. This is in fact healthy in some instances, as it liberates space and resources to greater talent. Conversely, dysfunctional turnover occurs when excellent employees, employees with potential or the ones in key positions exit the company; dysfunctional turnover destroys service quality, expertise, relationship with clients (Dalton et al., 1982; Hausknecht and Trevor, 2011). In the banking sector, the death of a knowledgeable relationship manager who works with large corporate accounts would be defined as definitely dysfunctional.

Turnover may also be external or internal. Internal turnover refers to the movement of employees within the same organisation between jobs like the case where a teller gets a job as a credit officer. This brings about certain disturbance on the team level but saves human capital on the whole. External turnover refers to the instances where employees exit the organisation altogether usually to compete with the organization, fintech companies or other sectors. The HR professionals are particularly worried about the external, dysfunctional, voluntary turnover of key talent groups (QIC-WD, 2022).

Lastly, researchers and managers distinguish between preventable and inevitable turnover. Unavoidable turnovers entail retirement, prolonged sickness, family or career change that the organisation can not reasonably avoid. Preventable turnover, in its turn, is attributed to aspects that can be affected by the organisation, including pay, workload, leadership, development prospects and culture (Al-Suraihi et al., 2021). Through effective HR strategy, this is an aspect that is avoided by diagnosis and avoidance.

 

1.3  The Psychological Process, not the Single Event, of Turnover.

 

Traditional paradigms by Mobley draw attention to the fact that turnover is not an immediate decision, it is rather a mental process. Mobley is an intermediate linkages model in which employees shift between job dissatisfaction, contemplating quitting their jobs, thought on alternatives to quitting their jobs, actual intention to quit and then resigning (Mobley, 1977; Mobley, 1982). Subsequent reviews affirm that the perceived job alternatives and movement facilitation are the determinants in this process (Hom et al., 2017).

This process view is significant to practice. It means that managers and HR teams can find the opportunity to intervene: redesigning work, resolving conflict, providing development avenues or just listening to employee issues. The organisations when they disregard the initial clues, the process goes on unconsciously until it manifests itself in the form of resignation letter.

 

1.4  The reasons why Turnover is a Strategic HRM Indicator.

 

Strategic HRM perspective and the resource-based perspective of the firm will also consider employees as not only a cost, but also as valuable, rare and difficult to copy resources that can provide a competitive advantage. By losing talented individuals, especially within a mass scale, the organisation ends up losing human capital, social capital and most of the time, customer confidence (Hausknecht and Trevor, 2011; Allen et al., 2010). This loss may be especially harmful in industries that require a substantial number of people, such as banking, hospitality or consulting.

The study of collective turnover indicates that the high unit-level turnover rates are frequently correlated with the lack of productivity, the poor quality of service and the increased failure rates (Hausknecht, 2017). Simultaneously, researchers caution that one should not make the assumption that turnover is always bad. An average functional turnover is beneficial to refresh the workforce and avoid sluggishness in case the organization does not lose key contributors (Dalton et al., 1982; Hom et al., 2017). However, the challenge that is really facing HR is not to pursue zero turnover, but to control turnover, who is leaving and why.

1.5  A Purpose of Learning Turnover in HRM Students.

 

To HRM students and practitioners, employee turnover can be viewed as a formidable scope of understanding the quality of the employment relationship. On the individual level, every exit is a kind of personal narration of the expectations, experiences, and choices. At organisational level, turnover trends indicate more issues on reward systems, leadership, work load, job design, fairness and culture.

In this perspective, turnover is far beyond an HR measurement that can be reported at the end of the year. It is an early-warning mechanism, which links day-to-day reality of people to long-term sustainability of organisations. The fine-tuning of the concept meaning, its definition, and its types, the psychological processes behind it and the strategic meaning is, thus, a key stepping stone before investigating the particular reasons behind turnover or establishing a retention plan in an industry like the global banking sector. In a labour market that provides skilled workers with more choices than at that point ever before, this understanding of clarity tends to aid HR professionals to develop evidence-based solutions rather than the predictive reliance on a short-term fix. Finally, the way an organisation perceives and quantifies turnover determines the decision on employee engagement, investment in employee retention and medium-term workforce planning.

1.6  References 

 

Allen, D.G., Bryant, P.C. and Vardaman, J.M. (2010) ‘Retaining talent: Replacing misconceptions with evidence-based strategies’, Academy of Management Perspectives, 24(2), pp. 48–64.

Al-Suraihi, W.A., Samar, M., Ibrahim, I. and Alshaibani, A. (2021) ‘Employee turnover: Causes, importance and retention strategies’, European Journal of Business and Management Research, 6(3), pp. 1–10.

Dalton, D.R., Todor, W.D. and Krackhardt, D. (1982) ‘Turnover overstated: The functional taxonomy’, Academy of Management Review, 7(1), pp. 117–123.

Hausknecht, J.P. (2017) ‘Collective turnover at the group, unit, and organizational levels: Evidence, issues, and implications’, Annual Review of Organizational Psychology and Organizational Behavior, 4, pp. 527–550.

Hausknecht, J.P. and Trevor, C.O. (2011) ‘Collective turnover at the group, unit, and organizational levels: Evidence, issues, and implications’, Journal of Management, 37(1), pp. 352–388.

Hom, P.W., Lee, T.W., Shaw, J.D. and Hausknecht, J.P. (2017) ‘One hundred years of employee turnover theory and research’, Journal of Applied Psychology, 102(3), pp. 530–545.

Mobley, W.H. (1977) ‘Intermediate linkages in the relationship between job satisfaction and employee turnover’, Journal of Applied Psychology, 62(2), pp. 237–240.

Mobley, W.H. (1982) Employee turnover: Causes, consequences, and control. Reading, MA: Addison-Wesley.

Ongori, H. (2007) ‘A review of the literature on employee turnover’, African Journal of Business Management, 1(3), pp. 49–54.

Price, J.L. (1977) The study of turnover. Ames, IA: Iowa State University Press.

QIC-WD (2022) Turnover: Umbrella summary. Quality Improvement Center for Workforce Development. Available at: https://qic-wd.org (Accessed: 18 November 2025).