2
Impacts of Costs Incurred from Employee Turnover on the Organization’s Performance
Literature Review Outline
Introduction
a. Presentation of the organization of the literature review
b. A brief description of boundaries and definition of terms that are included in the review
c. Explanation of the significance of the research topic
About Employee Turnover
a. Employee turnover is inevitable for organizations (Jun & Eckardt 2023)
b. There are two types of employee turnover: voluntary which includes resignation, and
involuntary which provides for termination of employment (O'Connell 2010)
c. Employee turnover causes the outflow, or loss, of knowledge, skills, and experiences,
thus forcing the management to close the gap by recruiting new employees to replace
leaving ones (Jun & Eckardt 2023)
Causes of Employee Turnover
a. Economic growth triggers more voluntary turnover cases (O'Connell 2010)
b. 78% of reasons for employee turnover are preventable by employers (Crisp 2021)
c. Employees today are less loyal to their employers, making them vulnerable to leaving the
organization at any time they want (Crisp 2021)
d. Better career opportunities, better remuneration, and dissatisfaction with current jobs are
other causes of employee turnover (Crisp 2021)
e. Employees' dissatisfaction with their jobs may also be caused by conflicts with leaders
and a lack of career development in their current workplace (Gen 2018)
3
f. It is easier now that employees showcase and sell their skills and qualifications, thus
prompting employers to offer them better job opportunities (Jun & Eckardt 2023)
Significance of Employee Turnover
a. 57% of Singapore companies reported that employee turnover seriously affects their
performance negatively (Gen 2018)
b. Employee turnover directly damages revenue and profitability due to the compromise of
quality of delivery, because employees who plan to leave may lose their motivation, and
their replacement may not be able to replicate their predecessors' productivity levels
(Tracey & Hinkin 2008)
c. Employee turnover may lead to management lag and passive, indicating that it may inflict
severe losses to the organization (Zhang & Rong 2015)
Costs of Employee Turnover
a. Direct costs
a. Training costs are one of three main components of the costs of turnover, along
with staffing and vacancy (O'Connell 2010)
b. Training costs do not only consist of the costs of trainees but also the costs of
trainers (Crisp 2021)
c. Socializing new employees may also cost the organization because they may not
directly produce the same productivity level as the ones they replace (Crisp 2021)
d. Training costs may vary because each new employee may have different learning
capacities, presenting the management with uncertainties in terms of budgeting
(Tracey & Hinkin 2008)
4
b. Indirect costs
a. Indirect costs are a more realistic estimate of the costs that organizations must pay
to cover the gap left by leaving employees
b. Indirect costs of employee turnover include damaged morale, human errors, and
inefficiency (O'Connell 2010)
c. The recruited employees are more likely inexperienced and have limited skills
because it is easier to recruit from the pool of unemployed rather than poaching
qualified employees from other companies (Crisp 2021)
d. It is more likely that new employees need assistance and guidance from senior
employees and other peers, thus hurting the productivity and effectiveness of the
entire team (Tracey & Hinkin 2008)
Impact of Costs Associated with Employee Turnover on Organizations
a. Employee turnover disrupts an organization's performance since it forces the
management to relocate resources and restructure their team, which may put the
organization's productivity at risk (Crisp 2021)
b. The costs incurred by employee retention force the management to cover the increasing
expenses, thus damaging the organization's budget (Tracey & Hinkin 2008)
c. A leaving employee is estimated to cost the organization approximately 150% of the
employee's annual earnings (Crisp 2021)
Conclusion
Summary of findings presented in the literature review
a. Identified gaps found among the reviewed literature
6
References
Crisp, G. (2021). Employee turnover: Costs, causes and cures. Murray State University.
Gen, F. M. (2018, September 20). The true, crippling costs of employee turnover. HRMAria,
https://hrmasia.com/the-cost-of-employee-turnover/.
Jun, M., & Eckardt, R. (2023). Training and employee turnover: A social exchange perspective.
BRQ Business Research Quarterly, 23409444231184482.
https://doi.org/10.1177/23409444231184482.
O’Connell, M. (2010). Employee turnover & retention: understanding the true costs and reducing
them through improved selection processes. Industrial Management article, 2.
https://www.researchgate.net/profile/Matthew_Oconnell3/publication/
211392097_The_Cost_of_Employee_Turnover/links/56af73e808ae9c1968b4508c/The-
Cost-of-Employee-Turnover.
Tracey, J. B., & Hinkin, T. R. (2008). Contextual factors and cost profiles associated with
employee turnover. Cornell Hospitality Quarterly, 49(1), 12-27.
http://dx.doi.org/10.1177/0010880407310191.
Zhang, L. Y., & Rong, X. Y. (2015, April). Analysis of employee turnover cost and impact on
economic benefits. In 2015 International Conference on Automation, Mechanical
Control and Computational Engineering. Atlantis Press.
Powered by TCPDF (www.tcpdf.org)
