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Sure Everyone Can Be Replaced … But at What Cost? Turnover as a Predictor of Unit-Level Performance
Abstract
Most turnover research positions employee turnover as the dependent variable and focuses on identifying its antecedents. In this study, we viewed turnover as a key predictor in determining unit-level performance. Specifically, a structural model was developed and tested that links managerial and employee turnover with performance through efficiency. We tested the model using a sample of 262 BURGER KING® restaurants. Results demonstrate that efficiency, measured as customer "wait time," mediates the relationships of both management and crew turnover to both sales and profit, and efficiency, measured as food waste, does not mediate the relationship of turnover to sales or profit.
... Traditionally, cost-benefit analysis is a widely used tool for this purpose (Santolin et al., 2023). In this study, we've selected three key criteria: 'turnover' (Michele Kacmar et al., 2006;Willard, 2012), 'profit' (Hussain et al., 2018;Santolin et al., 2023;Walker et al., 2020), and 'return on investment' (Santolin et al., 2023;Slaper & Hall, 2011;Walker et al., 2020), which are readily understandable and commonly applied for decision-making in economic sustainability assessment. Additional details about these criteria are provided in Table 1, offering decision-makers insights to advance their economic sustainability goals. ...
... (Michele Kacmar et al., 2006;Willard, 2012) Profit ...
This research examines the impact of the Russian-Ukraine war on the decisions made by managers regarding the three dimensions of the triple bottom line (TBL) of sustainability. Specifically, it investigates how managers in the Lombardy region of Italy adapted their approaches towards sustainability during this crisis. The descriptive statistics and PCA analyses demonstrate that managers adjusted their decisions regarding the social dimension of sustainability in response to the prevailing circumstances. The Russian-Ukraine war has led to a convergence of the social and economic dimensions within firms. However, the study also reveals that the social dimension is often considered secondary to the core business, making it the weakest aspect of the TBL approach. Nonetheless, external disruptions, such as in the case of the Russian-Ukraine war, can influence this approach, leading to a repositioning of the social dimension as a focal point in business strategies. By emphasizing the importance of considering social aspects in sustainability decision-making during crises, this research contributes valuable insights to the existing literature. The findings can inform the development of strategies to address challenges posed by the Russian-Ukraine war and enhance the integration of social criteria in sustainability decision-making.
... who are often excluded from WLB policies and other retention efforts. A study of 262 Burger King restaurants found that greater unit turnover was associated with more inefficiency, which in turn related to lower sales and profit (Kacmar et al. 2006). Given these findings, there is good reason to monitor WLB policy use and satisfaction by different employee groups to identify and rectify any disparities that harm entry-level, low-wage workers and other marginalized groups. ...
In this manuscript we review research on the effectiveness of work-life balance (WLB) policies in improving employee and organizational outcomes. We find that while WLB policies are often implemented with good intentions, their effects are generally small or inconsistent. We identify eight barriers to policy inclusivity that we theorize are linked to reduced effectiveness—a narrow definition of family, focusing on work-family rather than work-nonwork balance, low policy awareness, the practical constraints of access, overlooking vulnerable workers, the nature of the job, supervisor attitudes and behaviors, and unsupportive organizational cultures—and make recommendations for addressing these barriers. We also highlight the importance of considering individual differences and cultural contexts when implementing WLB policies. We conclude by proposing future research directions, such as examining coworker support and the impact of national culture on policy effectiveness.
... Furthermore, investing in human capital formation incurs costs, including selection, monitoring, and integrating new employees. When trained employees voluntarily quit, this can result in significant financial losses, especially for outsourced services like private security (Michele Kacmar et al., 2006). ...
Purpose
This paper aims to examine the effects on firms' outcomes of a new government regulation on the private security industry that aimed to enhance the selection and training processes for armed-private security officers.
Design/methodology/approach
By using human capital theory and using a data set built from various public sources, this study analyzes the effects of a new regulation implemented in 2013–2014 in Brazil mandating psychological assessments for hiring private security armed officers. Firm-level data and a Difference-in-Differences (DiD) identification strategy are used to investigate the effects on turnover and human capital outcomes.
Findings
The study identifies substantial changes resulting from the new government regulation in private security firms. While it has led to increased turnover rates, the regulation has also facilitated firms in enhancing the human capital composition of their workforce by enabling the recruitment of more experienced personnel.
Research limitations/implications
This research informs to current debates on the effects of policy interventions on firm's outcomes by showing how regulations aimed to improve the configuration of human capital can generate win-win situations for both firms and citizens, despite the short-term trade-offs between higher turnover rates and improved human capital outcomes.
Practical implications
Refining selection and training processes can enhance the workforce in private security firms by replacing less capable professionals with more experienced ones. Insights from this study offer guidance to policymakers and industry practitioners in shaping effective business and public policies.
Social implications
This study underscores the role of training and psychological assessments in enhancing the composition of human capital in the private security industry.
Originality/value
By highlighting the role of policy interventions in establishing barriers to unskilled workers engaging in hazardous activities, this study contributes to the burgeoning literature in strategic management on the interaction between policy interventions and firm outcomes.
... Education reflects socialization into tacit ways of thinking and doing (Collins, 2010) and was captured using measures such as education level (e.g., Chen & Nadkarni, 2017). Experience (industry or task) and tenure (number of years in a firm) captures tacit knowledge acquired through practice, exposure, and time in an organization (Kacmar et al., 2006). Finally, organizational learning produces tacit knowledge embodied in experience curves, routines, and procedures (e.g., Grant, 1996b;Nelson & Winter, 1982). ...
Research Summary
The knowledge‐based view (KBV) claims that knowledge is the most important strategic resource because it is the strongest determinant of firm competitive advantage and the glue that pulls resources together. We examine this assertion through a meta‐analysis of the accumulated evidence on the relationships among strategic resources and firm performance (stock market, financial performance, and growth). Findings from 348 samples reporting 248,136 firm‐level observations show that knowledge resources have the highest positive association with all three performance dimensions, with the highest positive relationship with growth, followed by market and then financial performance. Further, knowledge may serve as a foundational resource by augmenting other strategic resources and helping make firms different. These findings support the KBV's core prediction that knowledge resources offer superior strategic value.
Managerial Summary
Managers need to understand what resources yield the strongest and most consistent returns. We examined the often‐invoked claim that knowledge is the most important resource associated with firm success. Our study combines evidence from over 300 samples and finds that knowledge‐based resources are consistently associated with the strongest profit, stock market, and growth returns relative to other types of resource investments. For managers, the message is clear—acquire, integrate, retain, and motivate knowledge‐related resources because doing so pays off.
... Some recent studies have identified strong negative linear relationships between human capital expenditures (turnover rates) and workforce outcomes. (e.g., Kacmar et al., 2006). The most severe of these losses should occur as worker turnover rates increase from very low to more normal levels (Lockhart Shaw, Johnson & Duffy, 2005). ...
Skill and capacities present in the workforce, if put to productive use, can be vital determinants of a nation's long-term profit gains. Building employees' competence through skill acquisition is an important yardstick in measuring an organization's performance. Keeping into account the importance of investing in human resources in an organization, the current study tries to review existing literature and research work on human capital and organization investment with a main focus on human capital accumulation, human capital depletion and human capital drivers. The study reviewed existing literature that shows the relationship between human capital and organization investment, which shows either a firm performing well or projecting poor performance. The review has shown that human capital accumulation, human capital depletion and human capital drivers have a positive influence on the performance of an organization when proper investment strategies are adopted. The findings also show that organizations that invest in developing their human capital project growth, positive performance and survival of firms in very competitive environments.
This research focused on the effects of prior experiences based on the imprinting theory that how individual-level imprints are transferred to the organizational level. The research attempted to answer the question of how owners’ career imprints affect the performance of ventures. Ventures operating in the technology sector were categorized according to their academic and industry background. The results showed that although academic-partnered ventures were found to generate more patents, their performance is lower than non-academic partnered ventures. This research has theoretical and practical contributions providing results that show different institutional contexts lead to different outcomes through the occupational imprinting effect.
This study investigates whether employee characteristics are associated with corporate risk‐taking activities. The analysis shows that employee tenure is negatively associated with corporate risk‐taking. This association remains robust to the instrumental variable approach and propensity score matching method. Furthermore, the negative relation between employee tenure and corporate risk is stronger for firms offering lower wages and for more labor‐intensive firms. Overall, this study highlights the importance of considering the interaction between managers and stakeholders such as employees when understanding corporate risk‐taking.
A field investigation of 337 employees and their immediate superiors tested the mediating role of empowerment in relations between job characteristics, leader-member exchange (LMX), team-member exchange (TMX), and work outcomes. The meaning and competence dimensions of empowerment mediated the relation between job characteristics and work satisfaction. The meaning dimension also mediated the relation between job characteristics and organizational commitment. Contrary to prediction, empowerment did not mediate relations between LMX, TMX, and the outcome variables. Rather, LMX and TMX were directly related to organizational commitment. In addition,TMX was directly related to job performance. These findings suggest that work satisfaction is explained largely by job characteristics (through empowerment) but that LMX and TMX combine with job characteristics and empowerment to explain variation in organizational commitment and job performance.
Hom, Griffeth, and Sellaro's (1984) theoretical alternative to Mobley's (1977) turnover model was investigated in two studies. In Study 1, conceptual distinctions among model constructs and operationalizations of those constructs were validated. 206 nurses were surveyed, and constructs were assessed with multiple indicators. Although discriminating most constructs, structural equation modeling (SEM) identified a more parsimonious conceptualization in which a general construct underlies withdrawal cognitions. Other SEM analyses supported the indicators' construct validity and Hom et al.'s structural network. In Study 2, a longitudinal analogue of Hom et al.'s model was tested. A survey of 129 new nurses measured model constructs on three occasions. SEM disclosed that some causal effects in this model materialized contemporaneously, whereas others emerged after a lengthy time. Moreover, these causal effects systematically changed during newcomer assimilation. Implications for future research of turnover models are discussed.
Evidence is presented that (a) employees in an organization form global beliefs concerning the extent to which the organization values their contributions and cares about their well-being, (b) such perceived organizational support reduces absenteeism, and (c) the relation between perceived organizational support and absenteeism is greater for employees with a strong exchange ideology than those with a weak exchange ideology. These findings support the social exchange view that employees’ commitment to the organization is strongly influenced by their perception of the organization’s commitment to them. Perceived organizational support is assumed to increase the employee’s affective attachment to the organization and his or her expectancy that greater effort toward meeting organizational goals will be rewarded. The extent to which these factors increase work effort would depend on the strength of the employee’s exchange ideology favoring the trade of work effort for material and symbolic benefits.
This paper critically examines available theoretical models which have been derived from statistically established patterns of association between contextual and organizational variables. These models offer an interpretation of organizational structure as a product of primarily economic constraints which contextual variables are assumed to impose. It is argued that available models in fact attempt to explain organization at one remove by ignoring the essentially political process, whereby power-holders within organizations decide upon courses of strategic action. This `strategic choice' typically includes not only the establishment of structural forms but also the manipulation of environmental features and the choice of relevant performance standards. A theoretical re-orientation of this kind away from functional imperatives and towards a recognition of political action is developed and illustrated in the main body of the paper.
We propose four alternative predictions regarding the relationship between voluntary turnover and workforce performance and develop the hypothesis that safety and productivity outcomes mediate that relationship. In two intraindustry studies, strong support emerged for curvilinearity: the relationship between voluntary turnover and workforce performance is negative, but it is attenuated as turnover increases. Some modest support for workforce performance as a mediator of the voluntary turnover and financial performance relationship emerged. Implications for organization-level theory and research are addressed.
In this study, we investigate a central tenet of the resource-based view of the firm-that tacit knowledge often lies at the core of sustainable competitive advantage-and attempt to articulate it with greater theoretical precision than has been done previously. Using data from the National Basketball Association, we find support for a predicted positive relationship between shared team experience and team performance that declines as shared experience grows, eventually becoming negative. The implications of this study for non-sports-related firms are discussed along with suggestions for future research.
The manner in which the concept of reciprocity is implicated in functional theory is explored, enabling a reanalysis of the concepts of "survival" and "exploitation." The need to distinguish between the concepts of complementarity and reciprocity is stressed. Distinctions are also drawn between (1) reciprocity as a pattern of mutually contingent exchange of gratifications, (2) the existential or folk belief in reciprocity, and (3) the generalized moral norm of reciprocity. Reciprocity as a moral norm is analyzed; it is hypothesized that it is one of the universal "principal components" of moral codes. As Westermarck states, "To requite a benefit, or to be grateful to him who bestows it, is probably everywhere, at least under certain circumstances, regarded as a duty. This is a subject which in the present connection calls for special consideration." Ways in which the norm of reciprocity is implicated in the maintenance of stable social systems are examined.
In response to the recommendation that researchers examine the consequences of turnover instead of merely its determinants, we test nine hypotheses about how the turnover rate in organization work units influences integration, centralization, promotional opportunities, instrumental communication, job satisfaction, and behavioral commitment. Data from 115 work units in five organizations are studied using a longitudinal design which measures the impact of the work unit turnover rate for 8 months on the changes in the six variables over the 8-month period. After introducing numerous controls, turnover is found to have a net negative effect on instrumental communication and behavioral commitment. Implications for future research are discussed.
We develop a rule-based contingency misfit model and related hypotheses to test empirically the Burton and Obel (1998) multi contingency model for strategic organizational design. The model is a set of "if-then" misfit rules, in which misfits lead to a loss in performance; they are complements to the strategy and organizational contingency theory fit rules. Using data from 224 small- and medium-sized Danish firms, misfits are categorized and identified. Then, performance hypotheses are developed and tested using regression models. We confirm the hypotheses that firms with situational misfits or contingency misfits, or both, incur performance losses in return on assets compared with firms with no misfits. Contrary to our hypotheses, we did not find that additional misfits lead to increased performance loss. Our results suggest that just one misfit of any kind may significantly compromise performance. These results yield a deeper understanding of organizational contingency theory, as well as implications for the rule-based fit-misfit organizational design model.
Introduction Contracting A Modern Dilemma Contract Making The Contract Makers Contemporary Contracts Violating the Contract Changing the Contract Business Strategy and Contracts Trends in the New Social Contract