Voluntary turnover and job performance: Curvilinearity and the moderating influences of salary growth and promotions.

Abstract

The relationship between job performance and voluntary employee turnover was investigated for 5,143 exempt employees in a single firm.As hypothesized, support was found for E. F Jackofsky's (1984) curvilinear hypothesis, as turnover was higher for low and high performers than it was for average performers.Two potential moderators of the curvilinearity were examined in an attempt to explain conflicting results in the performance-turnover literature.As predicted, low salary growth and high promotions each produced a more pronounced curvilinear performance-turnover relationship.Most notably, salary growth effects on turnover were greatest for high performers, with high salary growth predicting rather low turnover for these employees, whereas low salary growth predicted extremely high turnover.Additionally, once salary growth was controlled, promotions positively predicted turnover; with poor performer turnover most strongly affected.The cost of voluntary employee turnover depends on many factors, including the relative supply and cost of replacements in either the internal or external labor market, the amount of training invested in the employee, and the performance level of the employee (Boudreau & Berger, 1985;Dalton, Todor, & Krackhardt, 1982;Hollenbeck & Williams, 1986).Where replacement costs are low and average performance of replacements is expected to be high, organizations can benefit from turnover of poor performers.In contrast, turnover of high performers is more likely to be dysfunctional for the organization (e.g., Hollenbeck & Williams, 1986;Park, Ofori-Dankworth, & Bishop, 1994;Schwab, 1991).Thus, it is important to identify the conditions under which employees of different performance levels are most likely to voluntarily leave the organization.This is especially true at the organization's higher job levels, where, for several reasons, high performer turnover is more costly than at lower job levels.For instance, because the standard deviation of performance tends to be greater in more complex jobs (Boudreau, 1992), top performer turnover in higher level jobs results in greater performance losses than similar turnover in lower level jobs.Moreover, performance at higher job levels tends to have a larger effect on firm success and is more difficult and expensive to replace.Finally, turnover of top performers in higher level jobs may result in the loss of future leaders of the organization, suggesting that the importance of top performer turnover in the salaried ranks extends well