exitsign

“I Quit!” Predicting When and Why Employees Quit

Posted On June 19, 2017 by Ashley Goreczny, V. Kumar, Todd Maurer and Sarang Sander
Ashley Goreczny

Ashley Goreczny, Ph.D. candidate in marketing

Rather than working employees to the point of burnout and seeing them leave, retaining employees can save companies millions of dollars, research shows. Quitting employees represent great costs to the firm, particularly in recruitment and training. Managers need to predict, “Which of my employees is likely to quit? And why?”

We explore the drivers of quitting behavior among salespeople in our paper, “Why Do Salespeople Quit? An Empirical Examination of Own and Peer Effects on Salesperson Turnover Behavior,” in the current issue of the Journal of Marketing Research.

Consider a managerial dilemma, as shown in the table below: Two salespeople who joined the firm in the same month have similar performance trajectories. Yet, one unexpectedly quits.

How can a manager know who is going to quit? And can the firm proactively prevent this turnover?

salesperson_revenue

V. Kumar

V. Kumar, Regents Professor and executive director, Center for Excellence in Brand & Customer Management

After studying two years of data on thousands of salespeople using state-of-the-art statistical techniques, we found that in addition to “own effects,” the behaviors of salespersons themselves, such as performance factors, salespersons are heavily influenced by their peers.

Quantifying this peer effect for the first time in this context, our team has found that managers need to pay very close attention to peer behaviors when assessing salesperson turnover.

Employee measures should not just include the role of own effects (such as relative performance, customer satisfaction and goal realization), but must also include peer effects (peer performance variance and voluntary/involuntary turnover).

If peers are leaving the firm, a remaining employee will distrust management if peers are being terminated, or they may feel there is potential for better options outside the firm if peers are quitting voluntarily. If employees are performing similarly, with low levels of performance variance in the office, motivation will decrease among the ranks.

Sarang Sunder, Ph.D. in marketing alumnus, now at Texas Christian University

Sarang Sunder, Ph.D. in marketing alumnus, now at Texas Christian University

To effectively manage turnover, managers need to use dashboard monitoring systems to help them assess how own effects, such as performance metrics, are changing, and assess the role of the peers in the turnover process.

If managers want to retain employees, they should increase communication about the strength of the company in times when employees voluntarily leave the company, and increase communication about trust in management during times of involuntary turnover.

 

Ashley Goreczny is a Ph.D. candidate in marketing at Georgia State University’s J. Mack Robinson College of Business under V. Kumar, Regents Professor and executive director of the Center for Excellence in Brand & Customer Management.

Todd Maurer, associate dean for research strategy

Todd Maurer, associate dean for research strategy

Todd Maurer is associate dean for research strategy. Sarang Sunder earned his Ph.D. in marketing from Robinson in 2015 and is now an assistant professor of marketing at Texas Christian University’s Neeley School of Business.

 

*Originally published June 5 , 2017 on SaportaReport.