Key Findings
• Organizations using high-involvement work practices have lower rates of quits, dismissals, and total turnover, which in turn leads to higher rates of customer satisfaction.
• Long-term investments in employees—such as the use of internal promotions , high relative pay, pensions, and full-time employment—lead to lower rates of quits, dismissals, and total turnover.
• HR practices that emphasize short-term performance such as intensive performance monitoring and commission-based pay—lead to higher rates of quits, dismissals, and total turnover

Center for Advanced Human Resource Studies

English

Key Findings • Organizations using high-involvement work practices have lower rates of quits, dismissals, and total turnover, which in turn leads to higher rates of customer satisfaction. • Long-term investments in employees—such as the use of internal promotions , high relative pay, pensions, and full-time employment—lead to lower rates of quits, dismissals, and total turnover. • HR practices that emphasize short-term performance such as intensive performance monitoring and commission-based pay—lead to higher rates of quits, dismissals, and total turnover.No17_ResearchLink_BattColvin_02112012.pdf: 3398 downloads, before Oct. 1, 2020

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An Employment Systems Approach to Turnover: Human Resources Practices, Quits, Dismissals, and Performance

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2-2012 
An Employment Systems Approach to Turnover: Human 
Resources Practices, Quits, Dismissals, and Performance 
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An Employment Systems Approach to Turnover: Human Resources Practices, 
Quits, Dismissals, and Performance 
Abstract 
Key Findings 
• Organizations using high-involvement work practices have lower rates of quits, dismissals, and total 
turnover, which in turn leads to higher rates of customer satisfaction. 
• Long-term investments in employees—such as the use of internal promotions , high relative pay, 
pensions, and full-time employment—lead to lower rates of quits, dismissals, and total turnover. 
• HR practices that emphasize short-term performance such as intensive performance monitoring and 
commission-based pay—lead to higher rates of quits, dismissals, and total turnover. 
Keywords 
turnover, retention, unemployment, HR practices, long term investments 
Comments 
Recommended Citation 
Center for Advanced Human Resource Studies. (2012, February). An employment systems approach to 
turnover: Human resources practices, quits, dismissals, and performance (CAHRS ResearchLink No. 17). 
Ithaca, NY: Cornell University, ILR School. 
This article is available at DigitalCommons@ILR: https://digitalcommons.ilr.cornell.edu/cahrs_researchlink/19 
 193 Ives Hall, Ithaca,  NY 14850 | 607.255.9358 | www.ilr.cornell.edu/cahrs
 AN EMPLOYMENT SYSTEMS 
 APPROACH TO TURNOVER: 
 HUMAN RESOURCES 
 PRACTICES, QUITS, DISMISSALS, 
 AND PERFORMANCE
 Key Findings
 •  Organizations using high-involvement work practices 
 have lower rates of  quits, dismissals, and total 
 turnover, which in turn leads to higher rates of  
 customer satisfaction. 
 •  Long-term investments in employees—such as the use 
 of  internal promotions , high relative pay, pensions, 
 and full-time employment —lead to lower rates of  
 quits, dismissals, and total turnover
 •  HR practices that emphasize short-term performance  
 such as intensive performance monitoring and 
 commission-based pay— lead to higher rates of  quits, 
 dismissals, and total turnover
 193 Ives Hall, Ithaca,  NY 14850
 607.255.9358
 www.ilr.cornell.edu/cahrs
 cahrs@cornell.edu
 Turnover is among the most important employment relations outcomes for 
 both employees and organizations. Employees face the uncertainties of  job 
 search and potential unemployment. Organizations confront uncertain 
 costs and benefits: The costs of  operational disruption and replacement of  
 human capital versus the benefits of  lower-cost labor, or fresh skills to 
 compete on innovation. These uncertainties raise the question of  which 
 management practices increase turnover; how much turnover is harmful or 
 beneficial, and under what conditions and why?  This paper addresses 
 these questions.  
 Employee turnover falls into two categories: “voluntary” and “involuntary”. Voluntary 
 turnover occurs when employees quit their jobs, typically after weighing their current job 
 against alternate prospects. Involuntary turnover occurs when employers dismiss 
 employees – perhaps due to hiring errors, changing skill requirements of  jobs, or poor 
 performance due to other factors. . Previous research has conceptualized quits and 
 dismissals as distinct from one another, with each having unique causes as well as 
 consequences (Dalton & Todor, 1979; Donaghue & Castle, 2006; Knight & Latreille, 
 2000; Shaw, Delery, Jenkins, & Gupta, 1998). 
 In this study the researchers took an alternate perspective and conceptualized quits and 
 dismissals as related phenomena brought about by the type of  employment -- or HR 
 system -- the employer utilizes.  They argue that employers often view the level of  turnover 
 as a ‘strategic variable’ – one of  many policies that may be used to achieve performance 
 objectives.  Jack Welch at GE, for example, built a ‘performance culture’ through an 
 explicit policy of  dismissing 10 percent of  employees each year.  This study examines how 
 the level of  quits and dismissals is affected by three dimensions of  HR systems: work 
 organization, commitment-inducing long-term incentives, and performance-enhancing 
 short-term incentives. It then tests whether these dimensions of  HR systems, as well as 
 turnover, affect customer satisfaction levels. 
 Topic
 page 2
 193 Ives Hall, Ithaca,  NY 14850
 607.255.9358
 www.ilr.cornell.edu/cahrs
 cahrs@cornell.edu
 page 3
 Results
 •  Employers that made greater use of  high-involvement work practices showed lower 
 rates of  quits, dismissals, and total turnover, which in turn led to  higher rates of  
 customer satisfaction
 •  Organizations that invested more in their workforce through long-term incentives 
 (internal promotion opportunities, high relative pay, pensions, and full-time jobs) 
 showed lower rates of  quits, dismissals, and total turnover.
 •  Organizations that made greater use of  short-term performance pressures (intensive 
 performance monitoring and commission-based pay) had higher rates of  quits, 
 dismissals, and total turnover
 •  In all three types of  HR practices— work organization, commitment-inducing long-
 term incentives, and performance-enhancing short-term incentives—the effect that 
 each practice had on turnover was the same for both quits and dismissals, supporting 
 the idea that quits and dismissals have similar causes within organizations
 •  These relationships held for organizations  over a five year period, meaning that these 
 results are fairly stable over time
 •  Higher  quits and total turnover rates led to  lower customer satisfaction rates 
 over time. 
 •  Do quits and dismissals have similar antecedents?
 •  How does the organization of  work – the extent of  employee discretion and group 
 collaboration – affect quit and dismissal rates?
 •  To what extent do long-term investments in employees lead to lower quit and 
 dismissal rates?
 •  How do  short-term performance-enhancing practices affect quit and dismissal rates?
 •  How do high rates of  quits and dismissals  affect operational performance?
 Study Questions
 This study shows that the way work is organized can affect turnover rates. Low-
 involvement work organizations display “Taylorized” work design, where jobs are narrowly 
 defined and employees have little-to-no say in their work. This study found dismissals to be 
 higher in low-involvement work organizations. This may occur because Taylorized work 
 systems allow employees to be more easily monitored and poor performance detected; or 
 because these systems demotivate employees, leading them to perform more poorly.  
 High-involvement work organizations are characterized by more employee involvement 
 and group problem solving. High-involvement systems provide a structure of  cooperation 
 and mutual learning in which employees who run into problems can obtain help from 
 Work Organization
 193 Ives Hall, Ithaca,  NY 14850
 607.255.9358
 www.ilr.cornell.edu/cahrs
 cahrs@cornell.edu
 page 4
 Investment  a nd 
 Inducement Strategies
 coworkers. Additionally, high-involvement work organizations create higher employee 
 satisfaction,  motivation, and commitment, and fewer quits (Hackman & Oldham, 1980). 
 The results of  this study showed that employers that made greater use of  high-
 involvement work organization had significantly lower rates of  quits, dismissals, and total 
 turnover. Additionally, high-involvement work systems improved operational performance, 
 as measured through customer service. 
 Employers that invested more in their employees and offered long-term incentives had 
 significantly lower rates of  quits, dismissals, and total turnover. These results have three 
 main drivers. First, long-term incentives, such as higher relative pay, benefits, and internal 
 promotion opportunities encourage employees to stay with an organization. Second, these 
 incentives are more likely to motivate employees to avoid poor performance that might 
 lead to dismissal. Last, firms are more hesitant to dismiss a worker who they have invested 
 in long term. 
 Performance- E nhancing 
 Expectations
 Short-term incentives are performance-enhancing practices that may include behavior-
 oriented measures (electronic monitoring, performance appraisals) and outcome-oriented 
 measures, such as “pay for performance”. Results suggest that workplaces featuring higher 
 short-term performance pressures, intensive performance monitoring, and commission-
 based pay had significantly higher rates of  quits, dismissals, and total turnover. Employees 
 typically view ongoing electronic monitoring as an indication of  lack of  trust, which may 
 lead even good performers to quit. Unlike some forms of  pay-for-performance, 
 commission-based pay puts pay at risk.  Because employees are often risk-averse – 
 particularly those whose pay is modest – commission-based pay is often viewed negatively 
 as current and future income is uncertain.
 Organizational Performance 
 Outcomes
 Past research has speculated that quits have a negative impact on performance because 
 better employees are more likely to leave than are ‘poor performers’.  By contrast,  
 dismissals are expected to have a positive impact on performance because the lower 
 performing workers are removed (Koys, 2001:111). Contrary to prior research, this study 
 found that both quits and dismissals have a negative impact on performance outcomes, as 
 measured by customer service evaluations. These results support the theory that both quits 
 and dismissals disrupt organizational operations by incurring costs to replace the worker, 
 fracturing stable work relationships, and decreasing trust and collaboration with the 
 workplace (Leana & Van Buren, 1999). 
 page 5
 This study was conducted by: 
 Rosemary Batt,
 Alice Hanson Cook Professor of  Women and Work, 
 ILR School, Cornell University
 Alexander J.S. Colvin, 
 associate professor of  Labor Relations and 
 Conflict Resolution, ILR School, Cornell University
 Researchers
 Data Source
 •  Contrary to previous arguments, quits and dismissals have similar antecedents, 
 suggesting that HR systems should be monitored on how they influenceboth quits and 
 dismissals, instead of  one or the other.  
 •  Organizations focusing on long-term customer service may want to focus on low overall 
 turnover in order to offer high-quality services to their customers. This lower turnover 
 could be achieved through investing in high-involvement work organization and long-
 term incentives and downplaying intensive performance monitoring. 
 •  Organizations focusing on high-volume, low-cost interactions with a goal of  short-term 
 sales may consider a Taylorized approach to work with the understanding that high 
 turnover is a likely consequence. 
 Data was taken from two nationally random surveys of  customer service centers in 1998 
 and 2003.  The 1998 data came from call centers in the telecommunications industry (call 
 center workforce size: mean = 107, median=24). Data from 2003 was collected from call 
 centers within all industries (call center workforce size: mean=167, median=73). The 
 surveys were completed by the senior manager at each center and were conducted by a 
 university-based survey research institute.
 Takeaways
 193 Ives Hall, Ithaca,  NY 14850
 607.255.9358
 www.ilr.cornell.edu/cahrs
 cahrs@cornell.edu
 Dalton, D.R., & Todor, W.D. 1979. Turnover turned over: An expanded and positive 
 perspective.  Academy of  Management Review, 4: 225-235. 
 Donaghue, C., Castle, N.G. 2006. Voluntary and involuntary nursing home staff  turnover. 
 Research on Aging,  28: 454-472. 
 Hackman, J.R., & Oldham, G.R. 1980.  Work redesign.  Reading, MA: Addison-Wesley.
 Knight, K.G., & Latreille, P.L. 2000. Discipline, dismissals and complaints to employment 
 tribunals.  British Journal of  Industrial Relations,  38: 533-555.
 Koys, D.J. 2001. The effects of  employee satisfaction, organizational citizenship behavior, 
 and turnover on organizational effectiveness: A unit-level, longitudinal study.  Personnel 
 Psychology,  54: 101-114. 
 Leana, C.R., & Van Buren, H.J. III. 1999. Organizational social capital and employment 
 practices.  Academy of  Management Review, 24: 538-555. 
 Shaw, J., Delery, J., Jenkins, G.D., Jr., & Gupta, N. 1998. An organization-level analysis of  
 voluntary and involuntary turnover.  Academy of  Management Journal,  39: 1-15. 
 References
 page 6
 The Center for Advanced Human Resource Studies (CAHRS) is an international center serving 
 corporate human resources leaders and their companies by providing critical tools for building and 
 leading high- performing HR organizations. CAHRS’ mission is to bring together partners and the 
 ILR School’s world-renowned HR Studies faculty to investigate, translate and apply the latest HR 
 research into practice excellence


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