The rate of employee turnover has increased over the past few decades in almost all United States economy sectors. According to a Forbes article, the employee turnover costs American entities approximately $160 billion each year (Boss, 2018). The high costs could be associated with hiring and training new employees and the loss of value related to losing a firm’s high performers. Moreover, other indirect costs are associated with turnover rates, including work disruption, theft of trade secrets, and loss of internal productivity in instances where other employees are highly dependent on those who resign from an entity (Lyons & Bandura, 2019). Despite the high employee turnover rate, several studies focus on the causes of the phenomenon and minimal on combatting employee turnover and promoting a high retention rate. Therefore, to contribute to the existing body of literature and bridge the literature gap in this topic, this review aims to analyze and determine how training and development affect employee turnover.
Literature Review
Before exploring the impact of training and development on employee turnover, it is imperative to understand the meaning of employee turnover, training, and development as used in this context. On the one hand, Mayhew (2019) describes turnover as the rate at which a company’s employees leave or quit their jobs or the outflow of employees from a company that necessitates new workers’ hiring. Fundamentally, scholars consider turnover as the measure of considerable parting between a firm and its employees over a given period.
Heneman and Judge proceed to classify employee turnover into two: involuntary and voluntary (as cited in Iqbal, 2010). According to the academicians, involuntary turnover can be discharge or downsizing. On the one hand, discharge turnover targets individual employees due to discipline or job performance issues, while downsizing is triggered by organization restructuring or the need for cost-reduction for a firm’s effectiveness (Iqbal, 2010). On the other hand, voluntary turnover can either be avoidable or unavoidable. Avoidable turnover is preventable through firms’ actions such as new job assignments and pay rises while unavoidable turnovers are beyond a firm’s control, which could stem from employee death or relocation (Iqbal, 2010). In essence, the term “employee turnover”, as used in this paper, entails all turnover forms, voluntary and involuntary.
Often, scholars attribute employee turnover to adverse outcomes such as poor organizational performance and work disruption. While these consequences are probable, Lee (2018) contends that the concept can be beneficial to a firm depending on the type of turnover involved. Notably, involuntary turnover, such as firing low-performing employees, can improve a firm’s performance. Similarly, downsizing can promote a firm’s performance by reducing costs and maximizing profits.
On the other hand, there lacks consensus on the definition of training and development. However, Latham and Dello propose that training and development are planned efforts to facilitate relevant skills, attitudes, and knowledge acquisition by a firm’s employees (as cited in Mulang, 2015). Grubb proceeds to distinguish the two terms and posits that training is a short-term educational process for nonmanagerial persons to facilitate technical knowledge and skills. At the same time, development is a long-term educational process in which managerial personnel is taught conceptual and theoretical knowledge (as cited in Mulang, 2015). In essence, training and development are educational processes intended to improve staff’s conceptual, technical, and decision-making skills.
How Training and Development Affects Employee Turnover
Studies that explore the causes of employee turnover have led to considerable scholarly interest in ways in which some proposed measures can reverse the phenomenon. For example, one of the highly proposed strategies to minimize employee turnover is training and development. According to Singh, this strategy results in a high employee retention rate and a positive impact on a firm’s productivity (as cited in Chowdhury & Nazmul, 2017). However, the scholar provides a scant explanation of how training and development can impact employee turnover. Therefore, the gap in this literature forms the basis for this review.
Academicians have provided a few illustrations of the manner in which training and development promote employee retention and reduce the turnover rate. One of the potential explanations given by scholars is the influence of social exchange theory. As the literature suggests, the social exchange relationship involves unspecified obligations which are “favors that create diffuse future obligations, not precisely defined ones, and the nature of the return cannot be bargained about but must be left to the discretion of the one who makes it” (Wikhamn & Hall, 29012, p.57). Put differently, the social exchange theory is based on the notion of reciprocity, whereby a party benefits from another and, in turn, develops the feeling of obligation towards each other.
Scholars argue that the social exchange theory provides a significant explanation of the manner in which training and development influence employee turnover. According to Hemakumar (2020), a firm’s commitment to training its employees triggers the latter’s commitment, influencing them to feel obligated to reciprocate the employers. Lee and Bruvold also emphasize that reducing employee turnover in training and development stems from the substantial obligations elicited among workers to repay their employers for investing in their development (as cited in Hemakumar, 2020). Fundamentally, training and development stimulate employees with thoughts to leave an organization to feel obligated to reciprocate their employers’ effort of investing in their acquisition of short and long-term managerial and nonmanagerial skills, leading to a lower employee turnover rate.
Literature also suggests that the other way training and development affects employee turnover is by enhancing a firm’s attractiveness relative to other industrial competitors. As is evident from a case study conducted in Mondol Group, burnout from performing the same job day in day out is among the factors that lead to a high employee turnover (Habib, Sheikh & Nabi, 2018). Arguably employees would be willing to voluntarily quit work if they feel it does not offer professional progression and seek employment in more attractive work environments. Therefore, by investing in training and development, an entity enhances its status in the employees’ eyes, compelling them to perceive that other organizations may not care more about their workers like their former employers (Hemakumar, 2020). In essence, employee retention in this context involves promoting a firm’s competitive advantage to make its offers more attractive relative to other potential employees. Moreover, the exercise encourages employee retention by enabling workers to develop alternative and more creative ways of undertaking their duties, thus enhancing their job satisfaction. It is also worth noting that training and development in this scenario mainly target avoidable voluntary turnover within a firm’s control.
Besides enhancing a firm’s attractiveness, studies suggest that training and development reduce employee turnover by improving workers’ commitment. Hemakumar (2020) posits that training brings a close association between commitment and retention. Arguably, employees who undergo training and development through their employers’ efforts may feel valued by the latter, thus enhancing their commitment to the organization. Moreover, training and development enable employees to identify with the organization, thus fostering a commitment to their employers. Fundamentally, training and development are primary means of retaining employees by making them feel like part of the organization and motivating them to remain in the firm.
Prior studies also suggest that training and development lower employee turnover by satisfying worker’s intrinsic interest in training and making them competent for their job positions. Cheng and Waldenberger (2013) note that individuals often expect to learn job-specific skills crucial for work performance and company-specific norms and policies to foster their work in the entity. Arguably, without proper training and development, employees may lack the skills required to undertake their tasks, leading to dissatisfaction and lack of motivation to remain in an organization. Therefore, by offering training and development, firms promote job competence, work satisfaction, and significant incentive to continue working in the organization.
While a significant body of literature suggests that training and development positively impact employee turnover, some scholars argue that the opposite is also possible. Notably, Sieben avers that the training impact on employees’ voluntary turnover can be positive or adverse depending on whether the exercise offers individuals the specific or general training skills (as cited in Cheng & Waldenberger, 2013). This information suggests that the notion of one-fit for all does not apply in training and development. Arguably, for the practice to impact employee turnover positively, employers must ensure that it matches their job needs. Besides, with the wrong training programs in place, a firm may still experience a high turnover rate while incurring substantial operational costs.
Conclusion
As is evident from the literature review, training and development can minimize employee turnover, although it must be suited to employees’ individual and specific needs. This exercise enhances employee retention by promoting a social exchange relationship, whereby employers elicit reciprocity from their employees for investing in their career and personal development. This social exchange relationship somewhat compels staff to remain within an organization because they feel obligated to stay committed to their employers for the skills offered during their stay in the entity. The synthesis of information from the literature review also shows that training and development affect employee turnover by enhancing a firm’s attractiveness relative to its competitors. Moreover, the exercise fosters a feeling of commitment to an organization because of its ability to meet employees’ training needs and makes workers feel valued and part of an entity; thus, compelling them to remain in an organization.
Information from this literature review also reveals that despite training and development being a viable option for minimizing employee turnover, its efficacy depends on the type of training program implemented by an organization. This information implies that firms must adopt training programs that suit their employees’ needs to achieve positive outcomes. Moreover, it is evident that training and development are only suitable for voluntary, avoidable employee turnover. Arguably, firms can only use such a strategy to retain employees who exhibit intentions of leaving a company because of work dissatisfaction and unfulfilled development needs. In essence, this paper proves the mechanisms by which training and development help minimize employee turnover. However, most of the information is theoretical; thus, actual research may be required to support these claims empirically.
References
Boss, J. (2018, February 26). Employee turnover is the highest it’s been in 10 years. Here’s what to do about it. Forbes. Retrieved from Forbes https://www.forbes.com/sites/jeffboss/2018/02/26/employee-turnover-is-the-highest-its-been-in-10-years-heres-what-to-do-about-it/?sh=309ba33b478c
Cheng, Y., Waldenberger, F. (2013). Does training affect employee turnover intention? Evidence from China. Academy of Management Annual Meeting Proceedings, 4(1), 16-38. doi:10.1108/JCHRM-10-2012-0024
Chowdhury, A.A.M. & Nazmul, H. (2017). Factors affecting employee turnover and sound retention strategies in business organization: A conceptual view. Problems and Perspectives in Management, 15(1), 63-71.doi:10.21511/ppm.15(1).2017.06
Habib, A., Sheikh, M. H., & Nabi, N. (2018). Employee turnover and its impact on apparel industry in Bangladesh: A case study of Mondol Group. Human Resource Management Research, 8(3), 63–68. Retrieved from http://article.sapub.org/10.5923.j.hrmr.20180803.03.html
Hemakumar M, N. (2020). Impact of training and development on employee retention at leading food and agri business company. International Journal of Advanced Science and Technology, 29(3s), 1170 – 1175. Retrieved from http://sersc.org/journals/index.php/IJAST/article/view/5975
Iqbal, A. (2010). Employee turnover: Causes, consequences and retention strategies in Saudi organizations. The Business Review, 16(2), 275-281. https://www.researchgate.net/publication/215912138_Employee_Turnover_Causes_Consequences_and_Retention_Strategies_in_Saudi_Organizations
Lee, S. (2018). Employee turnover and organizational performance in U.S. federal agencies. American Review of Public Administration, 48(6), 522-534. doi: 10.1177/0275074017715322
Lyons, P., & Bandura, R. (2019). Employee turnover: features and perspectives. Development and Learning in Organizations: An International Journal, ahead-of-print(ahead-of-print). https://doi.org/10.1108/dlo-02-2019-0048
Mayhew, R. (2019, February 5). Employee turnover definitions and calculations. Chron. https://smallbusiness.chron.com/staff-turnover-affects-morale-23663.html
Mulang, A. (2015). The importance of training for human resource development in organization. Journal of Public Administration and Governance, 5(1), 190-197. doi:10.5296/jpag.v5i1.7505
Wikhamn, W., & Hall, A. T. (2012). Social exchange in a Swedish work environment. International Journal of Business and Social Science, 3(23), 56-64. Retrieved from http://www.ijbssnet.com/journals/Vol_3_No_23_December_2012/6.pdf
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