After completing this chapter, you will be able to address the following: What can I do to reduce turnover costs in my firm? How does a firm define its offer-matching policy? Should we raid other firms for talent? And what can we do about poaching of our talent? What considerations are necessary for the firm when undergoing personnel reductions. | Chapter 4: Managing Turnover 1 11/13/2014 Chapter 4: Managing Turnover Is Turnover Good or Bad? Importance of Sorting Technical Change Organizational Change Hierarchical Structure Specific Human Capital Retention Strategies Reducing Costs of Losing Key Employees Embracing Turnover Bidding for Employees Raiding Other Firms: Benefits and Pitfalls Offer Matching Compensation with a Nonpecuniary Component Undervalued Workers Layoffs and Buyouts Who to Target for Layoffs Specific Human Capital Costs of Layoffs Buyouts Implementation of Buyouts Threat of Layoffs Speed and Extent of Downsizing Retirement Bridges Job Placement Services Summary 2 11/13/2014 Chapter 4 – Managing Turnover After completing this chapter, you will be able to address the following: What can I do to reduce turnover costs in my firm? How does a firm define its offer-matching policy? Should we raid other firms for talent? And what can we do about poaching of our talent? What considerations are necessary for the firm . | Chapter 4: Managing Turnover 1 11/13/2014 Chapter 4: Managing Turnover Is Turnover Good or Bad? Importance of Sorting Technical Change Organizational Change Hierarchical Structure Specific Human Capital Retention Strategies Reducing Costs of Losing Key Employees Embracing Turnover Bidding for Employees Raiding Other Firms: Benefits and Pitfalls Offer Matching Compensation with a Nonpecuniary Component Undervalued Workers Layoffs and Buyouts Who to Target for Layoffs Specific Human Capital Costs of Layoffs Buyouts Implementation of Buyouts Threat of Layoffs Speed and Extent of Downsizing Retirement Bridges Job Placement Services Summary 2 11/13/2014 Chapter 4 – Managing Turnover After completing this chapter, you will be able to address the following: What can I do to reduce turnover costs in my firm? How does a firm define its offer-matching policy? Should we raid other firms for talent? And what can we do about poaching of our talent? What considerations are necessary for the firm when undergoing personnel reductions 3 11/13/2014 3 Facts about Turnover Turnover rates are higher: In low wage jobs. In smaller firms. Among female employees. Why? When labor markets are tight. When the industry is highly concentrated in an urban area. 4 11/13/2014 4 TABLE Monthly Quit Rates per 100 Workers by Firm Size, Selected Industries (1977–1981 averages) 5 11/13/2014 5 FIGURE The Quit Rate and Labor Market Tightness 6 11/13/2014 6 TABLE Average Job Tenure, Selected Countries, 1995 7 11/13/2014 7 OECD: Long-Term Unemployed (> 1 yr, % of total) 8 11/13/2014 Job Openings and Turnover*: Source: US BLS, Issues in Labor Statistics, Summary 10-03, March 2010 9 11/13/2014 9 Positives and Negatives of Turnover Mobility in the labor market can improve job matches, which should increase firm productivity and overall economic output Also, combining senior and junior workers may increase productivity Mobility may reduce the incentive to invest in firm-specific human capital
