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Turnover and Retention
Turnover and Retention
January 2006
Turnover and retention - A summary of current literature
Table of contents
Introduction
References 22
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Turnover and retention - A summary of current literature
Introduction
This summary of current literature on turnover and retention is largely based on the literature
review document that was simultaneously prepared for People in Aid. This summary tries to
organize issues in a more systematic way, mixing concerns from the humanitarian sector
together with practice from the corporate sector when it seemed relevant. This document is
not meant to propose new ways forward, as it is mainly a review of existing literature, but it is
hoped that the way it is presented will help in highlighting and identifying key issues in
retaining staff for the humanitarian sector.
To clarify the scope of this summary - it focuses on expatriates or international cadres for two
reasons:
1) Most of the available literature and information available relates to this category of
staff, and,
2) Many key management posts within INGOs (and elsewhere) are currently filled by
this category of staff, and it is these posts where the problems of staff turnover or
retention issues are felt most acutely
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Turnover and retention - A summary of current literature
The total figure includes all leavers, even people who left involuntarily due to dismissal,
redundancy or retirement. It also makes no distinction between functional (i.e. beneficial )
turnover and that which is dysfunctional. This means that it is useful for benchmarking
purposes but of little practical use to identify precisely problems within an organisation (CIPD
2004).
Griffeth and Hom (2001) offer to focus on the part of turnover that is of real concern to an
organisation by differentiating between voluntary and involuntary turnover. In other words,
did the employee choose to leave the job or was it a decision made by the employer? Then,
voluntary resignations are further distinguished between functional (exit of substandard
performers) and dysfunctional (exit of effective performers). Finally, unavoidable resignations
over which the employer has no influence are also left aside (family move, childbirth, serious
illness or death). This leaves the group of avoidable resignations as the key focus. It also
implies that to allow an informed decision, turnover rates have to be calculated down to
department level, to identify which areas are most problematic.
Turnover
Voluntary Involuntary
Dysfunctional Functional
Avoidable Unavoidable
turnover Turnover
Recent research in the UK (CIPD 2005b) shows that turnover currently is around 15% and
notes that evidence doesn't seem to support the view that turnover rates are increasing over
time. According to the report, the biggest share is made of voluntary turnover, as opposed to
termination of the contract by the employer or retirement. However, there are wide
differences between regions and sectors. Industries such as retailing, hotels, restaurants or
call centres often have rates superior to 50% while the public sector average is at 11,5%.
Regions with lower unemployment rates will experience higher turnover. Rates can also
significantly vary within the same organisation in the same location and is often related to the
type of position but also contextual factors which will be addressed under retention.
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Turnover and retention - A summary of current literature
Another UK based report (People Count 2005) focusing on the voluntary sector mentions an
overall turnover rate for the voluntary sector of 21%, and 16,7% for the international
development sector. According to this research, turnover is lower for managerial employees
(13,9% in the international development sector) than for operational/support employees
(21%). Here as well, voluntary turnover makes up most of the turnover (12,4% vs. 2,1% for
end of contract and the rest for redundancies and dismissals).
However, as underlined by Loquercio (2005), calculating turnover rates for the humanitarian
sector is not so obvious. Because many relief aid agencies still largely rely on fixed term
contracts, which are usually not included in the calculation of turnover, turnover rates are
bound to be of little use for any analysis. The problem is acute for key management posts
which are often filled by expatriates and international cadres, and where humanitarian
agencies of necessity (or circumstance) often end up ‘rotating staff’, with the result that even
those with open ended contracts change from one assignment to the other, often on a yearly
basis. Therefore, Loquercio argues that it is necessary to rely on other indicators to monitor
problems related to turnover and staff rotation, offering among others the average duration of
field missions, vacancy rate and seniority of staff. According to his research, the average
duration of a mission for an expatriate ranges from 5,2 months (MSF-France) to 10,1 months
(ICRC). Finally, Loquercio notes that the highly unpredictable staffing needs, related to the
difficulty of forecasting humanitarian crises adds the problem of surge capacity to the
previously mentioned HR problems.
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Turnover and retention - A summary of current literature
For the humanitarian sector, Loquercio (2005) sees several benefits in ‘rotating’ expatriate
staff.
• By allowing breaks in between assignments, rotation of staff can allow to protect aid
workers from burnout.
• Exposing staff to different contexts over a short period of time can support the
development of experience and also allows this experience to travel and cross-
fertilize with others.
• Limiting the duration of assignments can help to bring new blood and new ideas in a
given context while ensuring the preservation of neutral and impartial analysis and
action.
• The use of fixed term contracts can allow more flexibility to adapt staffing to
operational and funding levels.
• Rotating staff and turnover provide more opportunities for career advancement.
However, the author recognises that negative general impact turnover can have and these
are discussed below. The point here is that each agency needs to measure its natural
turnover rate (CIPD 2005a) in order to determine when it is worth doing something.
Costing turnover
Looking more closely at the cost and impact of turnover, we need to include here both direct
and indirect costs. There are differences in what exactly should be included, but if we only
keep broad categories, we can mention (CIPD 2005b)
• Administration of the resignation
• Recruitment costs
• Selection costs
• Cost of covering during the period in which there is a vacancy
• Administration of the recruitment and selection process
• Induction training for the new employee
CIPD (2005b) says that "many of these costs consist of management or administrative staff
time (opportunity costs), but direct costs can also be substantial where advertisements,
agencies or assessment centres are used in the recruitment process." Direct costs are easier
to calculate, however, according to research, it only constitutes the tip of the iceberg. The
most important costs are related to the wider impact of turnover. This includes the cost of
mistakes, efficiency loss for new staff and departing ones, loss of knowledge and delays in
ongoing projects. For example, Gray et al. (1996:121) reported that for nurses in the UK, the
average efficiency loss over the first 6 months of employment was estimated to be 30%,
climbing to 50% in some cases. Estimations of recruitment and turnover costs in the UK are
provided below (from CIPD 2005a).
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Turnover and retention - A summary of current literature
Finally, even though measuring the costs of turnover can appear in some cases as
subjective, CIPD (2005b) reminds that "measurement of the costs to the employer as a result
of turnover is vital in building the business case for thorough and effective recruitment and
retention initiatives. These costings can be a powerful tool for winning line manager and
Board-level support for people management activities in these areas."
In the humanitarian sector, according to discussions held at EPN (2005), the impact of
turnover on humanitarian agencies' work output is such that the overall quality of the work
delivered is compromised, despite standards being set and a desire to raise them through
accountability.
Costs related to turnover are not fundamentally different in the humanitarian sector. Here
again, one can mention direct costs such as:
• Costs and time related to the recruitment, selection and training of new staff
• Costs related to departure, such as medicals, visas, briefing, handover or flight
tickets. These costs are always incurred but will be higher when staff rotation is
quick.
• Separation costs with debriefing and administrative procedures are also mentioned.
Indirect costs, which are also substantial according to Loquercio (2005) include:
• The impact of role overload and open vacancies on staff morale.
• Initial inefficiency, mistakes and short productive time incurred by frequent staff
rotation
• Loss of knowledge, especially informally captured knowledge and the negative
impact on the continuity of programmes.
Loquercio does however make a distinction between emergencies and longer term contexts,
considering the impact of staff turnover in emergencies as less detrimental because
substitution approaches are more often used in such cases.
In terms of strategic HR management, EPN 2005 also noted that if because of high staff
turnover, those recruited that showed promise are lost to the system, a problem in terms of
renewal of future senior managers will emerge.
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Turnover and retention - A summary of current literature
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Turnover and retention - A summary of current literature
Easier to
Structural factors: influence
Project based funding and Leaves
job insecurity, pressure on agency
overheads and poor
investment in training. • Deficient field management
• Poor HQ support to staff
• Unsatisfactory terms and
Personal factors: conditions of service
OUTCOME
Stays with
• Health problems low
engagement
• Diverging values
Organisational factors:
Agency’s policies, values and
management, including support,
• Work related stress
training and development, terms
and conditions of service • Conflicting family plans
• Professional concerns
• Private reasons
Contextual factors:
Context of assignments
(social life, security, climate,
Leaves
other local stress factors) sector
More difficult
to influence
Referring to issues of expatriate assignments but for private companies, an American survey
(Price Waterhouse Coopers 2005) found out that "for dual career couples, 59% of
respondents considered that the management of dual careers was the fundamental reason
for refusing an expatriate assignment".
Planning weaknesses, poor information systems, lack of management support at field level,
conflictual atmosphere, poor involvement of staff in decision making, lack of transparency in
management and stress and burnout are also cited in Henry (2004b).
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Turnover and retention - A summary of current literature
Engagement
So, how does engagement happen? “Employees need the will: the sense of mission, passion
and pride that motivates them to give that all- important discretionary effort. And they need
the way: the resources, support and tools from the organization to act on their sense of
mission and passion" says a report by Towers Perrin (2003). The link between employee
engagement and performance is illustrated in this report with the figure below.
In principle, the humanitarian sector should be able to count on a stronger engagement of its
employees, due to the more "noble" nature of its work. But relief aid agencies still need to
develop a sense of belonging to the organisation says Henry (2004b).
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Turnover and retention - A summary of current literature
Titl
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Turnover and retention - A summary of current literature
Therefore, the first step in designing a retention strategy is finding out why people leave, why
they stay and what could make them stay. As observed by Hinkin et al. (2000), when a
significant share of employees only stay for a limited time with an organisation, it is often the
symptom of underlying problems that need to be identified in order to determine what the
most adequate measures would be.
Exit interviews are commonly used for this purpose, but they have two shortfalls. First, they
come too late in the process, and second, as mentioned earlier, they might not be reliable if
conducted too soon after the resignation, especially when conducted by a line manager of
the departing employee (CIPD 2005b). It is therefore recommended to guarantee
confidentiality and conduct the interview some time after resignation.
More constructively, staff surveys should be conducted at regular intervals to poll employees'
attitude and gather information allowing to shape a retention strategy. Indeed, specialists
consider that building engagement, and hence retention is a process that needs continuous
updating (Towers Perrin 2003).
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Turnover and retention - A summary of current literature
engagement, performance and retention. These practices are split between three broad
categories:
• High employee involvement practices aiming at encouraging a greater level of
trust and communication between employers and employees, through involving them
more in the organisation, and empowerment. Common practices include circulating
information, staff association, staff surveys or self managed teams.
• Human resources practices target the creation of skills within the organisation
through practices such as appraisals, job performance feedbacks, review of training
needs, training or mentoring.
• Reward and commitment practices aim at creating a greater sense of belonging
and commitment to the organisation. Such practices include performance pay, flexible
job descriptions, job rotation, “family friendly” policies or non-pay benefits.
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Turnover and retention - A summary of current literature
staff rather than participate in strategic planning and orientation for the whole agency (Henry
2002b). It can be related to a lack of commitment on the side of agencies, but also to
structural problems related to funding.
The donors’ tendency to squeeze overhead costs to the minimum is impacting on the funds
that can be allocated for HR purposes says Henry (2004a). Few agencies have qualified HR
personnel and career planning is difficult because of the project based funding. "Cheap" HR
management is however not an option adds Henry, as it would put relief agencies' existence
at risk. Therefore, to improve the situation for this first point, action is required at agency level
to recognize the strategic role of the HR function and integrate it in strategic planning. There
is also a need to address the issue of funding, so that poor HR practices do not negatively
impact on the quality of agencies' programmes.
3. Managing people
“Good support, management and leadership of our staff is key to our effectiveness.”
It is common to hear that people join companies and leave managers. This is unfortunately
also true in the humanitarian sector. In all sectors, people want competent managers. Both
in terms of technical skills (know what they're talking about), fairness and people
management skills. Because they are the persons who impact most on their work
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Turnover and retention - A summary of current literature
experience, managers are also often the factor that will make the difference between staying
and resigning. Consultants in the corporate sector have proposed that line managers be
made accountable for staff turnover in their teams and reward managers whose record at
keeping people is good by including the subject in appraisals (CIPD 2005b). It was also
proposed to train line managers in effective supervision before appointing or promoting them
and offer re- training opportunities to existing managers who have a poor record at keeping
their staff.
This is not least challenging for humanitarian agencies, where many programme managers
with leadership responsibilities have a predominantly technical background and have often
not had a real opportunity to formally develop people skills (Loquercio 2005). Investing in
training, particularly management development, is therefore also a key priority for
humanitarian agencies, something that should not only benefit employees but also facilitate
the life of managers and help them to gain more confidence. Humanitarian agencies
probably could also make progress in terms of recognition and support, acknowledging
better and more openly success and staff commitment and demonstrating and expressing
more clearly that they care about their staff.
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Turnover and retention - A summary of current literature
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Turnover and retention - A summary of current literature
This is illustrated by the example of Darfur, where "agencies have become more desperate
and began to make compromises in their recruitment. This has resulted in dropping selection
criteria over time, interviews only being conducted over the phone, and less importance
placed on security and political competencies. Exceptions were made and a high percentage
of first timers were recruited" (EPN 2005). The impact was that inexperienced people were
allocated tasks and positions beyond their current abilities. Correspondingly there were high
expectations placed both on themselves and by others for them to perform. This is not
unique to Darfur, and it can be seen in other humanitarian responses. Of particular concern
is that people can accept positions beyond their competency level almost as if tempted to go
beyond their ability (EPN 2005). This in turn can mean that good people are put in positions
where they are destined to fail. And staff shortages and difficulty in recruiting lead to
increasing pressure on the staff on site to stay, almost to the point of manipulation (EPN
2005).
One of the main HR headaches in the humanitarian sector is described as follows: whereas
aid workers usually enter the sector when they are young and still mobile, they are often
faced after a few years with personal choices, mostly related to family issues that can force
them to leave the sector or at least make them a lot less mobile. As a result, humanitarian
agencies are confronted with difficulties in filling middle management positions with
adequately skilled and experienced staff (Loquercio 2005). Agencies can thus be forced to
compromise when recruiting or increase the speed of internal promotions without allowing
the necessary time to build experience. Loquercio observes that difficulties are worse for
smaller agencies who have less possibilities to offer internal promotion to their staff and are
therefore more likely to lose them to other agencies. Similarly, agencies who strongly rely on
volunteers often end up losing them to other agencies or sectors of activity (Loquercio 2005).
Trying to retain these programme managers is one option, but there is maybe also
something to be done in terms of recruitment policies. If finding the right person is a problem,
a possible solution is to consider potential and transferable skills rather than actual
experience or skills in the requisite role. Recognizing transferable skills acquired in the
corporate sector, agencies should work harder at providing entry routes in the humanitarian
sector instead of insisting that applicants have previous field experience (Loquercio 2005).
Indeed, if all agencies had such an approach, where would experienced aid workers come
from?
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Turnover and retention - A summary of current literature
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Turnover and retention - A summary of current literature
Improved humanitarian
capacity
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Turnover and retention - A summary of current literature
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Turnover and retention - A summary of current literature
and relations with national staff could probably be improved and make better use of the local
capacities and its ability to act as a longer term institutional memory, thanks to longer
commitment to the same location and agency.
6. Conclusions
It has been widely stated in recent years that companies should prepare themselves for a
‘war for talent’. But is this the case for humanitarian and emergency relief agencies?
Arguably not, for with aggressive competitivity, the global performance of the sector will
suffer with increased turnover and poorer performance. It would also likely result in the
concentration of resources within a core group of agencies, putting the diversity and
independence of humanitarian agencies at risk.
Agencies and donors need to assume their own responsibilities, with a coordinated effort to
alleviate the constraints that the system, and the lack of qualified and experienced managers
incurred by high turnover inflicts on the performance of the sector.
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Turnover and retention - A summary of current literature
References
• ADAMSKY Howard, (2005), “6 ways recruiters can support building a better organization:
Initiatives to focus on in the coming year”, www.erexchange.com
• ARTHUR Diane, (2001), “The employee recruitment and retention handbook”, Amacom
Books, New York
• BREUER L. Nancy, (2000), “Even in high turnover industries, not everyone’s a quitter”,
www.workforce.com/archive/feature/22/24/42/index.php
• DELOITTE, (2004), “It’s 2008: Do you know where your talent is? Why acquisition and
retention strategies don’t work”,
www.deloitte.com/dtt/cda/doc/content/US_TalentMgmtPOV_2.11.05.pdf
• GRAY Alastair, PHILIPS V.L. and NORMAND Charles, (1996), “The costs of nursing
turnover: evidence from the British National Health Service” Health policy 38, pp. 117-128
• HINKIN Timothy, TRACEY Bruce, (2000), “The cost of turnover: putting a price on the
learning curve”, Cornell hotel and restaurant administration quarterly, Vol 41(3), pp. 14-21
• LOQUERCIO David, (2005), “Staff turnover: how it affects humanitarian aid agencies, what
can be done about it” unpublished MSc dissertation, University of Manchester
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Turnover and retention - A summary of current literature
• Mercer Human resources consulting, (2004), “Communication: the key to retaining your
workforce”, www.mercerhr.com
• PEOPLE IN AID, (2003), “Code of good practice in the management and support of aid
personnel“, www.peopleinaid.org/download/Code%20of%20Good%20Practice.pdf
• RAIKES Lucille and VERNIER Jean-François, (2004), “Rewarding and retaining key talent:
are you ready for the recovery?”, www.towersperrin.com
• SUNG Johnny and ASHTON David, (2005), “High performance work practices: linking
strategy and skills to performance outcomes, ”
www.cipd.co.uk/subjects/corpstrtgy/busiperfm/dtihpwprac.htm?IsSrchRes=1
• Towers Perrin, (2003), “Working today: understanding what drives employee engagement”
www.towersperrin.com/hrservices/webcache/towers/Canada/publications/Reports/Talent_R
eport_2004/Talent_canada_eng.pdf
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