Individuals exit their positions for a multitude of reasons, be it redundancy, dismissal, or voluntarily stepping away. Yet, the impact of these departures on the colleagues they leave behind is often overlooked. A groundbreaking study conducted by the Sauder School of Business at the University of British Columbia (UBC) not only sheds light on this issue but also reveals the significant influence these exits have, potentially prompting a wave of resignations among the remaining staff. This research is a significant step towards understanding and managing the complex dynamics of staff turnover.

This investigation was rooted in an in-depth analysis of employment records from a large-scale retail company grappling with high staff turnover. The dataset comprised details on approximately one million employees, covering aspects such as their dates of employment, assigned stores and roles, departure dates, and the reasons behind their leaving.

The research team, including UBC Sauder Assistant Professor Sima Sajjadiani, John Kammeyer-Mueller and Alan Benson from the University of Minnesota, accessed records related to employee performance. This enabled them to distinguish between the impacts of high and low performers leaving.

Professor Sajjadiani and her colleagues adopted a holistic approach, viewing stores as ecosystems to analyze the dynamics of staff movement and the consequent effects over time. This method offered insights into each departure’s immediate and prolonged consequences, facilitating a comparative analysis across different time frames.

While previous research has primarily focused on the aftermath of turnover in terms of remaining employees’ performance and overall company output, the UBC study pioneers in examining how employee exits trigger further departures, the types of exits that contribute to the highest turnover, and the influence of the performance level of departing employees on this trend.

The study unveiled that layoffs prompt a significant and swift increase in voluntary resignations among those who remain, mainly when high performers are laid off. This scenario signals employees a lack of job security and perceived indifference from the organization towards their efforts, prompting them to consider leaving at the earliest opportunity.

On the other hand, voluntary resignations have a more moderate effect on increasing voluntary turnover, with the impact manifesting over a more extended period. High performers view such exits as indicative of better prospects elsewhere, prompting them to explore new opportunities, albeit after some time.

Dismissals showed a minimal and transient impact on increasing voluntary turnover, occasionally leading to a decrease. This is attributed to removing disruptive or underperforming individuals, encouraging high performers to stay longer and reducing the likelihood of voluntary resignations. However, unjustified dismissal of high performers can alarm other top performers and prompt them to leave.

Dr. Sajjadiani’s research findings are not just academic insights, but they also have practical implications for organizations. They highlight that organizations often underestimate the domino effect of departures and the subsequent costs associated with losing human capital. The findings underscore the importance of thoughtful exit management to prevent destabilizing the organization. Clear, compassionate communication and justified decisions, avoiding harsh measures where possible, are advised to mitigate the negative repercussions of staff turnover. By implementing these strategies, organizations can retain valuable human capital and maintain stability.

This research delivers a clear message to organizations on the importance of handling departures delicately to maintain stability and retain valuable human capital, underscoring the need for careful consideration in exit decisions to avoid rapid organizational destabilization.

More information: Sima Sajjadiani et al, Who Is Leaving and Why? The Dynamics of High-Quality Human Capital Outflows, Academy of Management Journal. DOI: 10.5465/amj.2021.1327

Journal information: Academy of Management Journal Provided by The University of British Columbia