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Organisational change and employee turnover

Article in Personnel Review · April 2004

DOI: 10.1108/00483480410518022

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Employee
Organisational change and turnover
employee turnover
Kevin M. Morrell, John Loan-Clarke and Adrian J. Wilkinson
Loughborough University Business School, Loughborough, UK 161
Keywords Employees turnover, Organizational change, National Health Service
Abstract Using insights from the relevant literature and recent empirical data, this paper
investigates the relationship between organisational change and employee turnover. It proposes a
mechanism for how widespread change translates into individual decisions to quit, and
corroborates four relevant hypotheses. The paper also illustrates the importance for managers of
understanding avoidability – the extent to which turnover decisions can be prevented – and
concludes with a research agenda, encapsulated by a model describing the relationship between
organisational change and turnover.

Introduction
Employee turnover is a much studied phenomenon (Shaw et al., 1998, p. 511).
Indeed, one recent meta-analysis (Hom and Griffeth, 1995) reviewed over 800
such studies (Iverson, 1999). However, there is no standard account for why
people choose to leave an organisation (Lee and Mitchell, 1994). This is
noteworthy because it is typically the occasions where people choose to leave
(i.e. voluntary, rather than involuntary turnover) that concern organisations
and organisational theorists. Voluntary turnover incurs signiŽ cant cost, both in
terms of direct costs (replacement, recruitment and selection, temporary staff,
management time), and also (and perhaps more signiŽ cantly) in terms of
indirect costs (morale, pressure on remaining staff, costs of learning,
product/service quality, organisational memory) and the loss of social capital
(Dess and Shaw, 2001). Although these costs are a feature of involuntary
turnover (during downsizing, or where employees are made redundant),
turnover is more commonly voluntary. Additionally, whereas in downsizing
programmes, the more able employees are retained, when it comes to voluntary
turnover, the best performers are also more likely to Ž nd alternative
employment, and thus leave (Jackofsky et al., 1986).
Although there is no standard framework for understanding the turnover
process as a whole, a wide range of factors have been found useful when it
comes to interpreting employee turnover, and these have been used to model
turnover in a range of different organisational and occupational settings. They
include: job satisfaction (Hom and Kinicki, 2001); labour market variables
(Kirschenbaum and Mano-Negrin, 1999); various forms of commitment (see
Meyer, 2001 for a review); equity (Aquino et al., 1997); psychological contract Personnel Review
(Morrison and Robinson, 1997); and many others (see Morrell et al. (2001a) for a Vol. 33 No. 2, 2004
pp. 161-173
review). However, there is little research speciŽ cally exploring the link between q Emerald Group Publishing Limited
0048-3486
organisational change and turnover and this is a gap in the existing literature. DOI 10.1108/00483480410518022
PR No one would seriously challenge the idea that mismanaging organisational
33,2 change can result in people choosing to leave. Indeed, as noted, it may result in
the highest performing (and therefore most employable) employees leaving
(Jackofsky et al., 1986). However, explaining how and why organisational
change can result in differential rates of turnover is less straightforward.
162
The unfolding model
This paper develops and applies a recent, in uential account of employee
turnover (Lee et al., 1999) to the problem of how organisational change can
in uence individual decisions to quit. Lee et al.’s (1999) ªunfolding modelº of
voluntary turnover represents a divergence from traditional thinking (Hom and
Griffeth, 1995), by focusing more on the decisional aspect of employee turnover,
in other words, showing instances of voluntary turnover as decisions to quit.
Indeed, the model is based on a theory of decision making, image theory
(Beach, 1990). The underlying premise of the model is that people leave
organisations in different ways, and it outlines Ž ve, prototypical pathways
describing different kinds of decision to quit. Each of these describes a different
decision process that a leaver may go through before they Ž nally quit. This
multi-route model has improved functionality in comparison with unitarist
accounts, which are restricted to understanding all people’s decisions as
in uenced by the same factors and considerations. The model represents a
signiŽ cant departure from the founders of modern research into turnover
(March and Simon, 1958) as well as from other in uential thinkers (Porter and
Steers, 1973; Price, 1977).
A notable feature of the unfolding model is its emphasis on the role of a
single, jarring event that initiates some decisions to quit. It is this construct ±
rather than the model as a whole ± which forms the theoretical focus for this
paper. Lee and Mitchell (1994) refer to this event as a ªshockº, although it is
important to emphasise that a shock need not be unexpected. A shock is
described as necessary to, ªshake employees from their lethargyº (Lee and
Mitchell, 1991, p. 118), resonating with the idea that sunk costs (Becker, 1960),
inertia (Mercer, 1979) and a wish to remain in employment (Sheridan and
Abelson, 1983) have each been found to be important factors in uencing
turnover. Understanding the role shocks play in precipitating decisions to quit
is directly relevant to understanding the relationship between organisational
change and employee turnover. This is because the notion of shock offers a
way to understand how there can be linkages between change at the level of
structures and social settings on the one hand, and individual agency on the
other. In other words, to understand how organisational change in uences
employee turnover.
This approach is helpful to understanding organisational change
management because the evaluation and measurement of change initiatives
involves balancing two considerations:
 (1) In terms of the external context, assessing change initiatives involves Employee
determining the necessity for the imposition of change at an turnover
organisational level.
(2) In terms of internal resources, for most organisations it will be important
to determine the likely impact such change has for individual employees,
and to manage the consequences of this change at various stages during 163
the process.
The second point is particularly important to consider if such change leads to
increased turnover and a loss of social capital, which may be critical to
organisational success (Dess and Shaw, 2001). Understanding the role that
shocks typically play in employee turnover can improve evaluation of the
impact of change on individual employees. In the light of recent research (Lee
et al., 1999, Morrell, 2002), and in light of the Ž ndings introduced in this study,
managers of change can beneŽ t from employing an understanding of shocks in
two ways. First, seeing shock as the initial stage in many leaving decisions
gives managers a useful heuristic device to think about intervention, in other
words, to stop people leaving. Second, assessing the incidence and type of
turnover prompted by these shocks can enhance the ability of managers and
organisations to monitor change.

Avoidable turnover
One way of diagnosing the amount of in uence organisations have over
turnover, is to measure the extent to which decisions to leave are described as
ªavoidableº by leavers (Campion, 1991; Morrell et al., 2001a). The underlying
question this tries to address is, ªCould the decision have been prevented by the
organisation?º It is important to be clear that this is the underlying question,
since when leavers report the avoidability of their decision, this actually gives a
measure of their personal perception of whether their decision could have been
prevented. This perception may be erroneous for a number of reasons. For
example, employees could describe their decision as ªavoidableº and specify a
desired intervention that would have prevented their leaving, for instance a
new ofŽ ce, or a pay rise. From an organisational perspective, this could
actually have been cost ineffective, or had other negative ramiŽ cations (it may
have been seen as unfair by other employees). There are also methodological
issues concerning validity and reliability that undermine simple reliance on
retrospective reporting (Miller et al., 1997). Avoidability is thus more complex
than a simple dichotomy between turnover that could be prevented or not
(Maertz and Campion, 2001). Despite these caveats, it is important to assess and
understand avoidability during a period of change, because voluntary turnover
is a key unwanted consequence, and cost of change.
Supplementing even a crude measure of turnover, such as the base rate ±
(number of leavers in a year/average number of employees in a year) * 100 ±
with a measure of avoidability, is likely to improve the basis for human
PR resource planning (Morrell, 2002). For example, if a Ž rm can identify that much
33,2 of their voluntary turnover is unavoidable, they may proŽ t better from
initiatives that seek to manage turnover post hoc, such as by streamlining
recruitment processes, rather than spend on theorised preventative measures,
such as increasing pay. This might be called a control model (Morrell, 2002). On
the other hand, if the bulk of turnover is avoidable this offers the potential for
164 directed intervention ± a prevention model (Morrell, 2002). If organisations
introduce change and experience a resultant increase in turnover, it is
important for them to be able to identify whether this change is typically
avoidable, or unavoidable in order to manage it effectively. Determining this
will enable them to manage the trade off between attending to the competitive
context on the one hand, and maintaining internal capability on the other. This
can be illustrated in more detail using three hypothetical scenarios:
(1) Scenario 1. If turnover increases as a result of the implementation of
change, and this turnover is mainly unavoidable (i.e. the organisation
could not prevent it), then ± bearing in mind that turnover results in
substantial indirect costs that may be difŽ cult to measure ± an
organisation can calculate the cost of the change, setting these against
the supposed beneŽ ts. In a sense, this represents an ideal scenario, one
where the impact of change is easy to identify and to understand, and
where it is comparatively simple to calculate cost-beneŽ t. In this case,
these leavers represent the proverbial eggs in the omelette, or to use a
military analogy, they can be described as ªnecessary casualtiesº. Of
course if managers in the organisation do not recognise that these
casualties are unavoidable, they may try spurious initiatives designed to
retain them, representing a waste of resources, or ªchasing shadowsº.
(2) Scenario 2. If turnover has increased as a result of the implementation of
change, and the levels of avoidable and unavoidable turnover are
approximately equal, then it will be beneŽ cial to look more closely at the
phenomenon and uncover those areas where intervention will result in
lower levels of avoidable turnover. This represents a mid-point, where
the internal impact of change is difŽ cult to understand, but signalling
substantial room for improvement. Continuing the military analogy, in
this instance change could result in ªunacceptable lossesº if managers
pursued either a pure control or prevention paradigm. On the other hand,
if it is possible to identify patterns of turnover correctly and to control
the costs of some unavoidable turnover, while minimising some
instances of avoidable turnover, this is analogous to managing
effectively, albeit in the ªfog of warº.
(3) Scenario 3. If turnover has increased as a result of the implementation of
change, and it is predominantly avoidable, then this implies that the
process is being mismanaged, and that an organisation is passing up on
the chance to retain its staff. In this instance change could result in the
 ªcharge of the Light Brigadeº, a futile and needless loss of valuable Employee
employees. However, if change managers can identify and successfully turnover
intervene in those areas that would otherwise lead to avoidable decisions
to quit, that would represent a notable victory, and the effects of change
could be militated against effectively ªbringing the troops back homeº.
To recap, if turnover is generally avoidable, this offers the potential for directed 165
intervention, and thereby prevention. If it is unavoidable, it will be better to
concentrate on managing the phenomenon by reducing its cost, and thereby
control turnover after the event. Since there is the potential for this process to
be disastrously mismanaged, this implies that there is a need for organisations
to assess patterns of avoidability in the overall proŽ le of employee turnover.
This level of measurement is needed in order not to incur unnecessary losses, or
wrongly try to prevent something when resources would be better spent
managing the consequences. This is illustrated in Figure 1.
Having outlined the theoretical background to the research, the remainder of
the paper mainly concerns the empirical element of this study.

Overview
The project tested the unfolding model by studying the leaving decisions of 352
National Health Service (NHS) nurses, using a slightly modiŽ ed version of Lee
et al.’s (1999) questionnaire. Lee et al. had studied 229 accountant leavers in the
USA and so some changes in the questionnaire were necessary to re ect
differences in national and organisational context. A short pilot of the
questionnaire (with 15 nurses and midwives), informed other changes, and the
revised survey also incorporated additional reŽ nements based on a theoretical
critique of the model (Morrell et al., 2001b). The original sample frame

Figure 1.
Theorised interactions
between perceived and
actual levels of avoidable
turnover
PR comprised voluntary leavers in the Ž nancial year 2000-2001, at eight NHS
33,2 Trusts. The Trusts were drawn from three regions and three of the larger
Trusts had recently undergone mergers, with one other facing the prospect of
merger in the near future. Another of the Trusts was undergoing a substantial
programme of development, including the building of a new multi-storey wing.
These Trusts were not in any way chosen as representative of the NHS as a
166 whole. It would not be possible to do this with just eight Trusts in any case;
moreover, since the focus of the research is on the decision processes involved
in instances of voluntary turnover, the unit of analysis is the individual leaver.
Nonetheless, taken together the Trusts represent a diverse range in terms of
location, size and type. There are four medium-sized Trusts, which are each
ªruralº ± in the sense they are not based exclusively in a large city, and four
large acute Trusts, each of which comprises a teaching hospital or hospitals. A
total of 1,190 surveys were sent out via the Trusts, of these, 368 were returned
during the period from the last week in April 2001, to the Ž rst week in
September 2001. A total of 16 surveys were excluded from the analysis because
the respondent was not a nurse (two cases), or because the turnover was
involuntary (ten cases), or because there was too much missing data to be able
to analyse the responses (four cases). The Ž nal sample size is thus 352. Taking
into account those surveys that were wrongly addressed and returned, this
represents an overall response rate of 31 per cent, which is signiŽ cantly higher
( p , 0.01) than in the relevant comparable study (Lee et al., 1999) and high for
this kind of survey (Owen and Jones, 1994, p. 313). All respondents were fully
qualiŽ ed (grade D or above) leavers who had voluntary left in the Ž nancial year
(April 2000-2001). The vast majority (over 97 per cent) were full time.

Hypotheses
Lee et al. (1999) had found strong support for the notion that shocks play an
important part in some people’s decisions to leave voluntarily. One aim of the
study was to test this idea. Successfully replicating this element of their results
has implications for understanding organisational change, because if there is
evidence that speciŽ c events play a substantial role in precipitating thoughts of
quitting, and thereby act to ªshake employees from their lethargyº, then this
has implications as to the presentation and management of change initiatives:
H1. Shocks will feature in a substantial number of cases of turnover.
Second, and extending Lee et al.’s work, an additional aim was to explore the
extent to which a shock had in uence over the Ž nal decision to quit. Although
others (Hom and Kinicki, 2001; Lee et al., 1999) have identiŽ ed that shocks may
cause people to Ž rst think about leaving, they have not acknowledged that the
shock does not necessarily have to in uence the Ž nal decision actually to leave.
It is possible to imagine a scenario where a shock may prompt thoughts of
quitting, but other factors could have more bearing on the ultimate decision to
leave ± in other words, the shock is the ªlast strawº, rather than the reason. For Employee
example, a shock (being asked to stay late again) might prompt an initial job turnover
search, but other factors could be of greater importance at the time of making
the decision to quit, perhaps ongoing levels of dissatisfaction. Although it was
anticipated ± in line with Hom and Kinicki (2001) and Lee et al. (1999) ± that
such shocks will be in uential, it is important to recognise this as an
assumption, and test it, given that this theory of turnover is still being
167
developed. A second hypothesis was that (if H1 holds) shocks will not only
prompt thoughts of quitting, but will also have a great degree of in uence
when it comes to the Ž nal decision to quit:
H2. Shocks will be highly in uential in terms of the Ž nal decision to quit.
Third, it was anticipated that where decisions to quit are associated with a
shock, leavers would describe these decisions as more salient, than cases where
these decisions are not. This is because when people consider the
circumstances surrounding their decision to quit, they are likely to have in
mind a particular event, and thus be invoking episodic memory (Wheeler et al.,
1997), which is associated with particularly elaborate and detailed recall
(Symons and Johnson, 1997, p. 371):
H3. Decisions initiated by shocks will be more salient.
Fourth, it is reasonable to suppose that decisions to leave that have been
prompted by a shock are more likely to be described as avoidable than decisions
that are not prompted by shock. Commonsensically, if the shock is a single event
at work that prompts thoughts of quitting, then leaving decisions initiated by
this shock would be avoidable (the event need not have happened). To give a
hypothetical example, the imposition without discussion of a new way of
working may result in someone quitting. This quit is likely to be construed by
the employee who quits as ªavoidableº in other words, in terms such as ªthey did
not have to do thatº. Equally, however, it is possible that any event that resulted
in someone choosing to leave could have been managed better. Continuing with
the same hypothetical example, if there is a failure by the organisation to
recognise and address concerns arising from the imposed reorganisation, this is
also likely to mean the quit is construed as ªavoidableº i.e. ªhaving done that, the
organisation could have done thisº (consulted/reversed the decision/explained
the reasons/compensated/ recognised the problem, etc.). This hypothesis is in
accordance with the idea that shocks are a way in which leavers are prompted to
overcome inertia (Mercer, 1979), and that fundamentally, employees wish to
remain in employment (Sheridan and Abelson, 1983). This contrasts with
decisions to quit that are not prompted by a single event, and where it is
presumably harder for leavers to identify a particular intervention that would
prevent their decision:
H4. Decisions initiated by shocks will be more avoidable.
PR Measures
33,2 Shock
A response of yes to the item, ªWas there a single, particular event that caused
you to think about leaving?º was taken as meaning that the respondent had
experienced a shock.
168
In¯uence over decision
In response to the item, ªHow much did the event in uence your nal decision
to leave?º a Ž ve-point Likert scale ranged from 1 ªnot at allº through 3
ªmoderate in uenceº to 5 ªoverwhelming in uenceº.

Salience
In response to the item, ªAt the time I left, it seemed clear to me that I had to
decide there and then whether to stay or goº a Ž ve-point agree-disagree Likert
scale. Agreement was taken to indicate that the decision was salient.

Avoidability
In response to the item, ªThere are things that the Trust could have done that
might have caused me to stayº a Ž ve-point agree-disagree Likert scale.
Agreement was taken to indicate that the decision was avoidable.

Method
For H1 and H2, it is sufŽ cient to present frequency data: Ž rst, showing the
number of shocks, and second, a histogram showing the responses to the shock
in uence item (see Figure 2).
H3 and H4 involve comparing the means of two groups to see whether there
are signiŽ cant differences. H3 proposes that decisions to quit that are
prompted by a shock are more salient than other types of decision to quit. To do
this, a one-tailed, independent samples t-test was carried out (Table I).
Similarly, H4 proposes that decisions to quit prompted by a shock are more
avoidable than other types of decision to quit. To do this, a one-tailed,
independent samples t-test (Table II) was carried out.

Results
. H1 ± 156 leavers (44.3 per cent) reported that a single particular event
had caused them to Ž rst think about leaving.
.
H2 ± in addition, most of the shocks were described as 4 ± ªit was the
main in uenceº, or 5 ± ªoverwhelming in uenceº.
These results indicate that there is sound support for H1 and H2 (one leaver
left the ªin uenceº item blank so there are only 155 cases here).
 Employee
turnover

169

Figure 2.
Shock in uence

t df Sig. (one-tailed)

SALNTa 2.332 348 0.010 Table I.

Notes: Independent samples
a
Decision saliancy t-test for equality of
H0 = saliency is not signiŽ cantly higher for shock induced quits than for other quits means

t df Sig. (one-tailed)

AVa 3.490 348 0.000 Table II.

Independent samples
Notes:
a t-test for equality of
Avoidability
means
H0 = avoidability is not signiŽ cantly higher for shock induced quits than for other quits

. H3 ± the results of the Ž rst t-test (Table I) support the hypothesis that
decision saliency is signiŽ cantly higher in cases where people report a
shock.
.
H4 ± the results of the second t-test (Table II) were also signiŽ cant;
supporting the hypothesis that avoidability is signiŽ cantly higher in
cases where people report a shock.

Discussion
Summary of ndings
. Shocks play a role in many cases where people decide to leave.
.
Shocks not only prompt initial thoughts about quitting, but also they
typically have a substantial in uence over the Ž nal leaving decision.
PR .
Decisions to quit that are prompted by a shock are typically more salient.
33,2 .
Decisions to quit that are prompted by a shock are typically more
avoidable.
As well as shedding more light on the turnover phenomenon in general, these
Ž ndings also have particular implications for the way that change is managed
170 within organisations. They point to the need to monitor and understand
turnover during periods of change. This research also suggests that where the
effects of global change initiatives translate into particular identiŽ able sources
of change (ªsingle, particular eventsº) for individual employees, it may be more
difŽ cult for organisations to prevent such quits, given that these decisions are
typically more salient. Nonetheless, leavers also typically describe these
decisions as more avoidable, and that suggests that some of the decisions to
quit prompted by the introduction of widespread change can be prevented. In
light of this, below are offered two principles concerning the implementation of
change:
(1) Measuring turnover should be done at both stages of the decision
process: Ž rst, at the time initial thoughts of quitting are likely to be
prompted; second, after the event to understand and identify leaving
patterns. More speciŽ cally this signals a need for: surveying/canvassing
opinion, emphasising two-way information sharing, consultation
processes, intra- and extra-Ž rm career guidance for employees (to gain
a sense of how many employees have been ªjoltedº into thoughts of
quitting); using exit interviews and leaver proŽ ling (to gain a sense of
how many leaving decisions are speciŽ cally due to the way the change
process has been implemented).
(2) Managing turnover should be done in key operational areas: minimising
the effects of change to patterns of work in key business areas, and
focusing on core business units, perhaps emphasising the elements of
continuity, development and progression, rather than change, to try to
minimise the incidence of shocks. Where turnover is unavoidable, then it
is important to manage the effects of turnover and particularly to seek to
minimise indirect costs.

Research agenda
As one element of a suggested research agenda, Figure 3 is offered for
consideration. This illustrates the interaction between change and turnover,
and shows how this interaction is mediated by the mechanism of shock. This
diagram can serve as a heuristic that could be used to guide the development of
strategic initiatives. It could also inform the rationale for measures of turnover,
thereby improving assessment of the impact of change on employees. Figure 3
follows from the acceptance of several assumptions. Each of the assumptions is
 Employee
turnover

171

Figure 3.
Theorised relationship
between organisational
change and turnover

phrased below in the form of a testable hypothesis, and these more formally
offer a suggested agenda for research:
(1) As change increases, the number of shock-induced quits will increase.
(2) There will always be a base level of unavoidable turnover, which will
increase as the overall level of change increases.
(3) However, some of the decisions to quit will also be avoidable, in other
words, they could be reduced by intervention.
(4) In a time of change, there will be scope to manage turnover effectively,
by selectively reducing the level of avoidable quits through informed
intervention.

Conclusion
Understanding voluntary turnover is important because when people choose to
leave there are multiple direct and indirect costs (Dess and Shaw, 2001). Firms
that implement change should be aware that this may result in increased
turnover, partly because changes in the pattern of work are likely to result in a
greater incidence of shocks. As well as understanding the role that shocks play
in quitting (Lee et al., 1999), Ž rms need to be aware of the avoidability of
turnover (Campion, 1991). This represents the scope for intervention. Greater
understanding of turnover, can allow for targeted intervention. Three scenarios
illustrate the importance of appreciating avoidability during change:
(1) If turnover is mainly unavoidable, then leavers are ªnecessary
casualtiesº of change and the cost of change (increased turnover) can
PR be weighed up against the supposed beneŽ ts. In this case the
33,2 organisation should pursue a control paradigm, seeking to manage the
effects of turnover post hoc, rather than spuriously intervene, which
would be simply ªchasing shadowsº.
(2) If change results in avoidable turnover, there is a ªcharge of the Light
172 Brigadeº ± a futile and needless loss of valuable employees. In this case
the organisation should pursue a prevention paradigm, where successful
intervention could militate against the effects of change, thus ªbringing
the troops back homeº.
(3) Where there is a mix of avoidable and unavoidable turnover, the internal
impact of change can be difŽ cult to ascertain. In this case there is room
for improvement and neither a pure control nor prevention paradigm
would be appropriate, but there is a need for sophisticated measures of
turnover, to help managers operating in the ªfog of warº.
Firms should simultaneously measure and manage turnover. Measuring
involves such things as: surveys, consultation processes, intra- and extra-Ž rm
career guidance, exit interviews and leaver proŽ ling. Managing is needed in
key operational areas to minimise the effects of change to key business areas.
Both elements are important to negotiate the complexities inherent in
implementing widespread change.

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