Turnover Performance Relationship Research Articles

The indirect relationship between employee job performance and voluntary turnover: A meta-analysis

Employee turnover brings lots of negative effects on organizations. Researchers have investigated why employees quit their jobs and found job performance to be an important predictor. Previous studies have proposed potential mediators of the performance-turnover relationship from job attitudes, job alternatives, and job embeddedness perspectives. Nevertheless, they have failed to provide sufficient empirical support for these three paths and which of these three mediating mechanisms matters most. To address these questions, we used meta-analytic structural equation modeling (MASEM) to examine these three mediating mechanisms between job performance and voluntary turnover. Drawing on 299 independent samples (N = 524,740), we found that job performance had a negative impact on employee voluntary turnover through desirability of movement and turnover intention, through job embeddedness and turnover intention, and a positive impact through ease of movement and turnover intention. Among these three paths, desirability of movement had the strongest mediating effect, followed by job embeddedness and ease of movement. Theoretical and practical implications as well as future directions were discussed.

기업집단에서의 최고경영자 교체: 내부시장의 효과

Despite extensive research on factors influencing the turnover of Chief Executive Officers
 (CEOs), studies focusing specifically on CEO succession within business group-affiliated
 firms, are relatively scarce. Additionally, while some research has investigated the impact
 of business group affiliations on the performance-turnover relationship, the findings have
 been inconsistent. To address this gap, this study focuses on the internal markets exclusive
 to firms affiliated with business groups. Building on existing literature on CEO succession
 and business groups, I hypothesize that the magnitude of internal transactions in products
 and services diminishes the effect of firm performance on CEO turnover. Further, I
 hypothesize that the extent of internal capital investment from other affiliated firms and
 the size of the internal labor market intensify this effect. The analysis, based on CEO
 turnovers in listed non-financial firms in business groups that were subject to mutual
 investment restrictions from 2010 to 2015, supports the hypotheses. This study contributes
 to the existing literature on CEO succession in business groups by emphasizing that the
 groups' internal environment is pivotal in shaping decision-makers' perceptions and
 evaluations during the succession process.

Board characteristics and CEO turnover–performance relationship: evidence from India

Purpose This paper aims to investigate the impact of board characteristics on CEO turnover performance relationship (TPR) in Indian listed firms. Design/methodology/approach A subset of the Standard and Poor’s Bombay Stock Exchange 500 (S&P BSE 500) Index companies was analyzed over the period 2015–2019 using the logistic (fixed-effects) regression model. Findings It was found that a weak relationship exists between CEO turnover and firm performance. With respect to board characteristics, board size was found to have a significant role in strengthening the TPR. However, other characteristics, such as board independence, multiple directors, board meetings and board gender diversity, played no role in influencing the TPR. Research limitations/implications First, the study period is limited to five years, during which several sample firms did not face any CEO turnover event leading to small sample size. Second, this study considers only the board’s gender diversity, whereas other types of diversity are omitted. Third, this study does not differentiate between insider and professional CEOs. Practical implications The findings suggest that regulators should focus on the effective enforcement of laws to strengthen the TPR and improve the monitoring role of boards, particularly in emerging economies like India, which face type II agency problems in addition to traditional principal–agent conflict. The results also offer implications for corporations, investors and academic researchers, highlighting areas that need considerable attention pertaining to corporate governance. Originality/value This study discerns the impact of several board-related characteristics on the TPR, particularly after the introduction of the new Companies Act 2013 in the emerging economy of India, where it has not been explored extensively.

Optimal Turnover Rates and Performance in Public Organizations: Theoretical Expectations

This paper advances the theory of turnover and performance in public organizations, incorporating labor market conditions and quality of labor. In doing so, we first present theories on optimal turnover rates, based on a cost-benefit theoretical framework. We then discuss how optimal turnover rates in public organizations change according to labor supply and demand. After that, we illustrate how public labor market conditions and quality of labor affect turnover-performance relationship. Throughout the paper, we propose a set of testable propositions for future scholars, which posit the turnover-performance relationships being conditioned on various organizational and environmental contextual factors.

An Examination of Whether and How Prevention Climate Alters the Influence of Turnover on Performance

Recent meta-analytic studies imply that groups often find ways of neutralizing turnover’s harmful effects and that important moderators of the turnover–performance relationship must be missing from the literature. Building on theory and findings related to the threat–rigidity effect, we suggest that groups tend to respond maladaptively to turnover when group norms promote the idea that turnover is threatening. Specifically, we suggest that prevention climate—that is, a climate focused on minimizing mistakes and costs—largely determines the degree to which group norms encourage members to view turnover as threatening and, in turn, the degree to which groups become less adaptive and perform worse in response to turnover. Across a sample of 232 groups, we found evidence that turnover is indeed more negatively related to performance for those groups with a strong prevention climate. Further, in a controlled laboratory context where we manipulated turnover and prevention climate, we found causal evidence supporting our full conceptual model. Our work advances research on turnover by identifying an important moderator and an underlying mechanism of the turnover–performance relationship.

Does organizational performance affect employee turnover? A re‐examination of the turnover–performance relationship

AbstractA common problem with using organizational performance as the dependent variable is the ignoring of feedback effect. The current conceptualization of the turnover–performance relationship is mostly unidirectional, focusing on how turnover affects organizational performance. Only a few scholars have investigated the possible reverse relationship between turnover and performance. Aiming to further the research on the feedback effect of organizational performance, this study employed cross‐lagged structural equation models that are especially suitable for modelling the possible reverse relationships between variables. Data were collected from public elementary and middle schools in New York City over a three‐year period. The results consistently show that organizational performance was negatively related to subsequent employee turnover. This research contributes to the development of a more valid and comprehensive understanding of the relationship between employee turnover and organizational performance.

The influence of organizational context on the managerial turnover–performance relationship

AbstractThis study performs a comprehensive examination of organizational context in the relationship between managerial turnover and organizational performance. Using theoretical frameworks of human and social capital, we focus on the moderating roles of entity size, employment system, industry brand, and location. To test our hypotheses, we worked with the company records of a multinational fashion retail group with more than 4,000 stores grouped into eight different brands and 100,000 employees in more than 31 countries. To estimate the causal contextual effects of the relationship between voluntary managerial turnover and organizational performance, we designed a quasi‐experiment using propensity score matching analysis. Our results show that the dysfunctional side of managerial turnover is significant for stores that are large, for stores managed under a primary employment system, for brands operating with higher levels of service orientation, and for countries with more restrictive employment protection legislation. We discuss the implications of these findings for practice and for future research.

The Role of Firm Size and Knowledge Intensity in the Performance Effects of Collective Turnover

As employees are among firms’ most important resources and labor markets are facing serious labor shortages, firm-level collective turnover is one of the most important challenges facing organizations. Context-emergent turnover theory provides a theoretical framework for the performance implications of collective turnover and argues that context, and in particular, firm size, plays a crucial role in the collective turnover–performance relationship. Yet, the moderating role of firm size remains undertheorized, empirically understudied, and thus, unclear. Based on the resource-based view of the firm, we develop a theoretical framework for two competing perspectives (a negative and a positive one) on the role of firm size and put forward the firm’s knowledge intensity as a crucial additional moderator. The main premise is that whereas firm size determines what resources firms have to successfully cope with turnover, knowledge intensity determines the resources firms need to do so. We propose a three-way interaction, suggesting that firm size reinforces the harmful effect of turnover in highly knowledge-intensive firms and buffers it in firms with low levels of knowledge intensity. Using a unique multi-industry and longitudinal administrative data set of 6,913 Belgian firms (2012–2016), we find support for these assumptions. This study highlights the importance of the context in which firms have to deal with turnover, and it spurs researchers to go beyond studying turnover in narrow study contexts, to take into account the interplay among different but intertwined organizational contingencies, and to acknowledge both the quantitative (how many employees leave) and qualitative components (who leaves) of turnover.

Collective turnover: An expanded meta-analytic exploration and comparison

As evidenced by the publication of three meta-analyses in 2013, the importance of collective turnover is garnering increasing attention. Although each of these meta-analyses delivers a unique and significant impact to the HR literature, there remain opportunities to expand and build upon their contributions. In a comparison of the three extant meta-analyses, we found over 90 unique papers that were included in only one of each of the three studies, and >10 new studies published since 2013. We combined and expanded the existing meta-analyses, offering a comparison of results, as well as contributing to a greater understanding of the role of collective turnover. In the most comprehensive analysis to date, analyzing 2149 effect sizes from 159 studies across 150 articles, we find both support for and divergence from several previously examined relationships, as well as evidence of a curvilinear turnover-performance relationship and of the contagious influence of turnover.

Differential Effects of Task Performance, Organizational Citizenship Behavior, and Job Complexity on Voluntary Turnover

The purpose of this study was to investigate the performance–turnover relationship by considering the effects of task performance and OCBs simultaneously while also examining the moderating effect job complexity has on the relationship between voluntary turnover and each type of performance. Data were obtained as part of a larger study to validate an employment test, in which actual turnover data and supervisory ratings of job performance were collected for employees in two hospitals (n = 782). Task performance exhibited a curvilinear relationship with turnover, while OCB exhibited a negative linear relationship with turnover. Job complexity moderated both of these relationships. For task performance, turnover in high-complexity jobs was greater for low performers but lower for high performers relative to that of employees in low-complexity jobs. For OCB, the negative relationship with turnover was more pronounced in high-complexity jobs. Both low- and high-task performers are more likely to turnover, while employees exhibiting high OCBs are less likely to turnover. These results imply that retention strategies are critical for top performers, but especially in high-complexity jobs. Organizations may be able to discourage voluntary turnover by creating conditions that stimulate OCB, particularly in highly complex jobs. Most prior performance–turnover relationship research used unidimensional measures of performance, whereas this study included two dimensions of performance and examined this relationship while controlling for one-performance dimension when predicting the other. Furthermore, this study is one of the first studies to suggest that job complexity moderates the performance–turnover relationship.

INTERNAL LABOR MARKET HOMOGENEITY AND CEO SUCCESSION: EVIDENCE FROM S&P 1500

ABSTRACT In this paper, we examine whether the homogeneity/heterogeneity nature of the internal labor market affects CEO successions. Using a heterogeneity index, which captures the concentration of executive compensation, we find that a more homogeneous internal labor market is associated with (1) a greater likelihood of an internal replacement, (2) a higher probability of a CEO turnover, and (3) a bigger tournament prize. In addition, the negative performance-turnover relationship is strengthened by a more homogeneous internal labor market. Our results support tournament theory and suggest our heterogeneity index may proxy for internal labor market competition. Keywords Executive Compensation, CEO Turnover, Tournaments

Shareholder Incentive Alignment and CEO Turnover: The Case of Split-Share Structure Reforms in China

In this study we analyze the effect of split-share structure reforms on CEO turnover and performance relationship in Chinese listed firms. We use special dataset that manually categorizes a large number of CEO turnover events as either forced or non-forced. By employing logit regression and interaction effects we find that sensitivity of abnormal stock performance to probability of forced CEO turnover in Chinese SOEs was positive during 1999-2005 but negative during 2006-2011. Post-turnover abnormal stock returns were also higher during 2006-2011 compared to 1999-2005 for Chinese SOEs. The evidence shows that split-share structure reforms affected the CEO turnover-performance relationship through exposure effect, that exposure to stock price changes has forced the owners Chinese SOEs to evaluate the managers for the poor stock performance. This also shows that alignment in the incentives of the minority and majority shareholders helps protect the interests of the minority shareholders by changing the internal monitoring mechanisms of the managers.

Turnover and Knowledge Loss: An Examination of the Differential Impact of Production Manager and Worker Turnover in Service and Manufacturing Firms

AbstractThis research examines the comparative effects of production manager and worker turnover in service and manufacturing settings. We suggest that, due to the centrality of human action in services and the ability of manufacturers to insulate the technical core, service and manufacturing companies are differentially dependent on and impacted by the loss of production manager and worker knowledge. The results from a survey of 150 service and manufacturing firms provide partial support for this notion and show that turnover impacts these organizations differently. More specifically, we find that: (1) the negative impact of production worker turnover on firm performance is greater in service settings than in manufacturing settings; and (2) the negative impact of production worker turnover on firm performance is greater than the impact of production manager turnover in service firms. In addition, our findings show that organizational capital moderates the turnover–performance relationship for production workers in service firms.

"Managing Stock and Flow of Human Capital: Inflow, Outflow, and Stock Stability"

We advance the collective turnover literature by investigating the effects of human capital outflow, inflow, and the stock stability on organizational performance. Building on the human capital stock and flow model, we theorize that negative effects of human capital outflow—measured as voluntary turnover rates—are influenced differently by the types of human capital inflow— measured as inexperience and experienced hires. In addition, we also investigate how human capital stock stability— measured as employment variability—influences the human capital outflow and organizational performance relationship. Using balanced panel data from six years of biennial surveys of 310 Korean firms merged with archival data, we show that the turnover rates and organizational performance relationship is weakened when a firm hires inexperienced workers at high rates, but not when it hires experienced workers at high rates. In addition, the turnover-performance relationship was weakened when employment variability was high. We discuss the implications for future turnover, staffing, and human resource management research and practice.

Top management turnover, firm performance and government control: Evidence from China's listed state-owned enterprises

Using a sample of 916 Chinese listed state-owned enterprises (SOEs) from 2001 to 2005, we find that the likelihood of top management turnover is negatively associated with firm performance, suggesting the existence of an effective corporate governance mechanism in an emerging economy that is highly controlled by government. We also find that the negative turnover–performance relationship is stronger when the SOE is directly held by the central or local government, holding a monopolistic position in a local economy or in a strategic/regulated industry. The results indicate that the market-based corporate governance mechanism that disciplines top executives as a result of poor performance is not only used in Chinese SOEs, but is used more frequently when the governance control of SOEs is more intense. Our findings support the notion that government control strengthens rather than weakens the turnover–performance governance mechanism. Our additional analysis shows that this complementary effect is stronger in regions that lack pro-market institutions, such as investor protections and a functioning capital market.

The effect of culture on the curvilinear relationship between performance and turnover.

Although researchers have theorized that there exists a curvilinear relationship between job performance and voluntary turnover, their research has been tested in the United States or culturally similar Switzerland. Through a study of the performance-turnover relationship from a multinational service-oriented organization in 24 countries, we demonstrate that the general relationship between performance and turnover is similar across countries but the details of that relationship change across countries. Using 4 cultural dimensions--in-group collectivism, power distance, uncertainty avoidance, and performance orientation--we find that cultural factors alter the overall probability of voluntary turnover and influence the degree of curvilinearity in the performance-turnover relationship. Our findings have implications for research on the performance-turnover relationship, turnover research, and practice.

Dynamic aspects of voluntary turnover: An integrated approach to curvilinearity in the performance–turnover relationship.

Previous research pertaining to job performance and voluntary turnover has been guided by 2 distinct theoretical perspectives. First, the push-pull model proposes that there is a quadratic or curvilinear relationship existing between these 2 variables. Second, the unfolding model of turnover posits that turnover is a dynamic process and that a downward performance change may increase the likelihood of organizational separation. Drawing on decision theory, we propose and test an integrative framework. This approach incorporates both of these earlier models. Specifically, we argue that individuals are most likely to voluntarily exit when they are below-average performers who are also experiencing a downward performance change. Furthermore, the interaction between this downward change and performance partially accounts for the curvilinear relationship proposed by the push-pull model. Findings from a longitudinal field study supported this integrative theory.

Top Management Turnover, Firm Performance and Government Control: Evidence from China’s Listed State-Owned Enterprises

Using a sample of 916 Chinese listed state-owned enterprises (SOEs) from 2001 to 2005, we find the likelihood of top management turnover is negatively associated with firm performance, suggesting the existence of an effective market-based corporate governance mechanism in an emerging economy that is highly controlled by government. We also find that the negative turnover-performance relationship is stronger when the SOE is held by central government, directly held by local government, holds a monopolistic position in local economy or in a strategic/regulated industry. The results indicate that the market-based corporate governance mechanism that punishes top executives as a result of poor performance is not only used in Chinese SOEs, but is more frequently used when the governance control of SOEs is more intensive. Our findings support the notion that government control strengthens rather than weakens the turnover-performance governance mechanism. Our additional analysis shows that this complementary effect persists in the regions lack of pro-market institutions such as investor protections and functioning capital market.

Ownership, performance and executive turnover in China

To better understand the relationship between different types of firm ownership and management turnover, this study classifies ownership along two dimensions: the type of owner and the concentration of ownership. Within this framework, a unique data set is used to study the impact of management turnover on a company's performance. This study, in addition to confirming some of the results from previous studies, includes interesting and important new results. Most importantly, it finds evidence that the sensitivity of CEO turnover to performance is weaker in state-controlled firms than in non-state firms, and varies according to different subtypes of private ownership. We also demonstrate that the turnover–performance relationship is curvilinear in ownership concentration, but that this relationship moves in opposite directions under state and private ownership. Important policy implications of these findings are discussed.

Firm Performance and Managerial Turnover: The Case of Ukraine

The paper studies whether and how CEO turnover in Ukrainian firms is related to their performance. Based on a novel dataset covering Ukrainian joint stock companies in 2002-2006, the paper finds statistically significant negative association between the past performance of firms measured by return on sales and return on assets, and the likelihood of managerial turnover. While the strength of the turnover-performance relationship does not seem to depend on factors such as managerial ownership and supervisory board size, we do find significant entrenchments effects associated with ownership by managers. Overall, our analysis suggests that corporate governance in Ukraine operates with a certain degree of efficiency, despite the well-known lacunas in the country's institutional environment.