Initial and Longer-Term Change in Unit-Level Turnover Following Leader Succession: Contingent Effects of Outgoing and Incoming Leader Characteristics

Abstract

Leader exits at the work-unit level are prevalent, yet little attention has been devoted to understanding the impact of leader succession on employee turnover. In this paper, we draw from uncertainty-management theory to specify and test conditions under which leader exits are followed by increases (or decreases) in the turnover rates of remaining members. We theorize that leader exits disrupt the status quo and heighten remaining members’ feelings of uncertainty and propose that characteristics of the outgoing and incoming leaders help members forecast their future work situation and influence their decisions to stay or leave. Leveraging longitudinal data from 287 locations of a U.S. hospitality organization (n = 6,357 unit-month observations), we test several attributes of the succession context that moderate the effects of leader departures on both the initial change in turnover levels and the longer-term change in turnover trends. Discontinuous growth models revealed both an initial spike and a longer-term rise in voluntary turnover rates following the departure of a high-performing leader. In addition, the longer-term turnover trajectory was found to trend upward when replacements lacked role experience, when replacements were internally promoted, and when post-succession involuntary termination rates were high. Overall, we conclude that the magnitude and direction of leader-succession effects on unit turnover rates depends on uncertainty-reducing characteristics associated with both outgoing and incoming leaders.