Is Turnover Relationship to Performance Linear Or U-Inverted? A Systematic Literature Review

Introduction

According to (Dessler 2018), Human Resource Management (HRM) is the process of acquiring, training, appraising, and compensating employees and paying attention to their work relations, culture, health and safety, and fairness issues. Dessler also mentions that one of the crucial roles of HR is to ensure a sufficient number of employees. One of the HRM problems that a company often faces is the difficulty of managing employees, so the company experiences high turnover (Dessler, 2018). Employee turnover is the inflow and outflow of employees of a company and is considered one of the most essential organizational phenomena because it requires managers to be able to analyze, understand, and manage its consequences (Ramalho Luz, C. M. D., Luiz de Paula, S., & de Oliveira 2018). Employee turnover significantly impacts the organization due to the costs associated with employee turnover. It can have a negative impact on the productivity, sustainability, competitiveness, and profitability of the organization (Al-Suraihi, W. A. et al., 2021). Employee turnover has always been an essential issue for managing an organization. For example, organizations need to recruit and train new employees, as well as the time it takes for new employees to be produced effectively.

Today, the organizational context is witnessing high employee turnover rates, which has become a significant problem for organizations and, consequently for human resource management, leading to the loss of experienced employees, which in turn, entails high replacement costs (Moreira, A., Cesário, F., Chambel, M. J., & Castanheira 2020). Based on a study on organizational costs and benefits (Hausknecht & Trevor, 2011) that employee turnover in large organizations results in a decrease in organizational efficiency because employee rotation erodes the company's human resources. Previous studies identified a negative relationship between employee turnover and organizational efficiency (Vicenc, F., Pep, S., & Jose M, 2016).

A report by (Shaw, 2011) provides insight that there are two relationships between turnover rates and performance. The first is a linear relationship between turnover and performance. The second view is the inverted U or U inverted relationship. But the literature on the inverse U-relationship has encountered some difficulties due to its acceptance, in large part due to the lack of conclusive and supportive findings. However, (Shaw, 2011) said that hypothesizing an inverted U-shaped relationship has a clear basis. At low turnover rates, the workforce can become stagnant and closed-minded (Shaw, 2011). However, at low to moderate levels, turnover can be revitalized by increasing workforce innovation, flexibility, and adaptability (Shaw, 2011). Moderate turnover may have other benefits. (Shaw, 2011) argues that newly arrived employees may be highly motivated to perform well and may even have more up-to-date or up-to-date technological skills (TS). Less turnover may also have a positive effect in terms of lowering salaries and benefits costs, a key component of certain productivity, efficiency, and profitability metrics. However, at a very high level, experts agree that the negatives outweigh the positives; after a moderate amount, voluntary turnover rate and organizational performance tend to be negatively related. Thus, this view predicts that turnover rate and performance are positively related to zero and moderate turnover rates, reach a zero-slope point and are negatively related to moderate and high turnover. Shaw conducted a literature review on the relationship between turnover and performance in 2011. After more than 10 years, is there any change in the current trend in the literature which links turnover and performance? Therefore, the objectives of this study are: (1) To find out trend research on turnover and performance per year. (2) To determine the research trend of the relationship between turnover and linear performance? and (3) To find out the research trend of the relationship between turnover and u-inverted performance.

Literature Review

Turnover

According to (Ramalho Luz, C. M. D., Luiz de Paula, S., & de Oliveira 2018), Turnover is associated with the inflow and outflow of company employees. It is considered one of the most important contemporary organizational issues, because it requires managers to be able to analyze, understand, and manage the consequences of the turnover (Ramalho Luz, C. M. D., Luiz de Paula, S., & de Oliveira 2018). Turnover has become an important issue over the last few decades in the context of labour shortages. Employees are increasingly characterized by a desire to leave their jobs (Gharbi, H., Aliane, N., Falah, K. A. Al, & Sobaih, 2022). The reasons for the increasing turnover rate are the career development program is considered unattractive, unfit company culture, remuneration, and benefit. As for generation Z, the increasing burden of work and lack of flexibility will make them leave their job (Dwidienawati & Gandasari, 2018). By definition, turnover refers to the conscious and intentional desire to leave an organization.

The best way to investigate employees turnover is to follow their turnover intention as a predictor of actual turnover behaviour (Berber, N., & Gaši, 2022). Turnover intention is difficult to detect and far more dangerous than turnover itself (Gharbi, H., Aliane, N., Falah, K. A. Al, & Sobaih, 2022). Turnover Intention refers to the intention of the organizational member to leave his current job or position (Lai et al., 2022).

According to (Pu, B., Ji, S., & Sang 2022) turnover describes the psychological tendency of employees to leave their current careers. Which is the sum of dissatisfaction with the current job, intention to leave, willingness, and the possibility to find another job (Pu, B., Ji, S., & Sang 2022). (Berber, N., & Gaši, 2022) state that turnover intention can be defined as a mental decision that applies to an individual to continue or leave work. It is a measure to understand turnover before employees actually quit or leave the organization (Berber, N., & Gaši, 2022). Turnover intention is an important predictor of actual turnover and is a cognitive stage that occurs before real turnover, which refers to mental thoughts or decisions about staying or moving (Lotfi, M., Akhuleh, O. Z., Judi, A., & Khodayari 2022).

Effect of High Turnover

Moreira, A., Cesário, F., Chambel, M. J., & Castanheira (2020) explains that the current organizational context is seen from the high level of employee turnover, which has become a significant problem for organizations and consequently for human resource management. (Shaw 2011) says that high turnover rates can disrupt organizational systems that are designed to be stable, and this disruption causes organizations to expend potentially more energy in maintaining input/throughput/output processes than they take from resources (Shaw, 2011). At high turnover rates, new employees usually replace employees with short tenure, and this results in minimal performance.

High turnover can lead to additional costs for human resource management and recruitment (eg, in time and effort to hire new staff and train them for their jobs). In addition, turnover also increases the pressure on staff to work above and beyond their contract hours, which leads to mistakes and the moral decline of existing staff (Hebles, M., Trincado-Munoz, F., & Ortega, 2022).

In addition, (Gharbi, H., Aliane, N., Falah, K. A. Al, & Sobaih, 2022) state that high turnover causes additional costs for the organization. Because when an employee leaves the organization, the management can do nothing but spend money to recruit and train new employees. In addition, turnover can lead to negative job outcomes, for example, unethical behaviour, social loafing, and low job performance itself (Gharbi (Gharbi, H., Aliane, N., Falah, K. A. Al, & Sobaih 2022).. Employee turnover is a major concern for companies because of the costs incurred by employee turnover which can have a negative impact on organizational performance (Al-Suraihi, W. A. et al. 2021).

Low Turnover Effect

A systematic review conducted by (Chad 2019), on the one hand, states that low employee turnover has negative consequences for a company. Because in reality, low turnover can be an obstacle to performance for the organization because the company cannot diversify or offer good opportunities to its up-and-coming staff for promotion. This will also lead to failure in innovation and best practices in the organization, which can be learned from people from other strong organizations. This can hinder growth within the organization (Chad, 2019).

According to (Shaw 2011), when organizations have low voluntary turnover rates, their group of employees has accumulated high average levels of human capital. Then additional employees who resign significantly damage the accumulation of human capital and its impact will weaken organizational performance.

The inverted U-inverted relationship hypothesis has a simple basis. At low voluntary turnover rates, the workforce can become stagnant and closed-minded (Shaw, 2011). However, at low to moderate levels, turnover can be revitalized by increasing workforce innovation, flexibility, and adaptability (Shaw, 2011).

Factors Affecting Turnover

Employee turnover is one of the biggest challenges for all organizations. Because it can lead to different economic, psychological, and organizational consequences (Berber, N., & Gaši, 2022). A systematic review study by (Lotfi, M., Akhuleh, O. Z., Judi, A., & Khodayari 2022) divides the factors related to the desire to move into organizational and personal categories. The first includes the organizational work environment, organizational culture, organizational commitment, shifts and working hours, and social support. And the last one consists of job satisfaction, fatigue, and demographic factors by (Lotfi, M., Akhuleh, O. Z., Judi, A., & Khodayari 2022).

According to (Al-Suraihi, W. A. et al. 2021) there are several reasons why employees leave a job or organization employees feel that their job or workplace is not as they expected, there is also a mismatch between the job and the person. Another factor that can lead to turnover is very little training and feedback, and very few opportunities to grow and develop. Another factor is that employees feel disowned, employees feel stressed because they work too much and have an imbalance between work and life. Another reason is the loss of trust in the leader (Al-Suraihi, W. A. et al. 2021).

Work-life balance is known to have a negative impact (Lestari & Margaretha, 2021). If the company failed to provide a work-life balance environment the turnover will be high. Besides work-life balance, the level of work engagement also has a negative impact on turnover intention as claimed by (Anasori et al., 2021; Jung et al., 2021; Memon et al., 2016; Milliman et al., 2018; Santhanam & Srinivas, 2020). Previous studies state that employee benefits influence turnover negatively (Martinson & De Leon, 2018; Owusu & Gregar, 2021; Rai et al., 2019). Job satisfaction was argued by(Skelton, Nattress, and Dwyer 2020) and (De Simone, Planta, and Cicotto 2018) to also has a negative influence on turnover intention.

Methodology

Research Design

A systematic Literature Review is "a systematic, explicit, and reproducible method for identifying, (comprehensively), evaluating, and synthesizing the entire existing part of the work completed and produced by researchers, scholars, and practitioners” (Fink, 2013).

Reviewing the current literature allows a broad understanding of the existing articles and also identifies the knowledge that has the potential to be explored. By summarizing, analyzing, and synthesizing literature related to a particular topic, hypotheses can be tested, and new theories can be developed (Xiao & Watson, 2019).

This systematic review was conducted based on the Prisma Systematic Review (Liberati et al., 2009). There are 27 checklists in Prisma's guidance. However, because this review will not carry out a synthesis, only 15 checklists were used which are systematic in the title, abstract, reasons, objectives, criteria, sources, search, selection, data collection, data item, study selection, study characteristic, resume of analysis, limitation, and conclusion. Protocol and enrolment, risk of bias in individual studies, summary measures, results synthesis, risk of bias across studies, additional analyses, individual study results, and funding are the 12 checklists that were not used in this study.

Eligibility Criteria

The criteria used by this research is to use the year above 2011, which is 2012 to 2022, because this research is to continue research (Shaw, 2011), which conducts SLR/Literature Review research until 2011.

Information Source

The data source for this research is collected from the Scopus database. This study is a Social Science study, and Scopus is a resource that has many references for management.

Search Terms and Criteria

The purpose of this study is to conduct an extensive search on the topic of turnover and performance. Therefore, the authors used the following keywords to search all studies in the source database: “turnover and performance”. The search period for the last 11 years (2012 - 2022).

Study Selection

Further selection criteria are applied to enter or exclude articles for journal reviews. The first criterion is duplication. If a duplication is found, it will be counted as only 1 journal. After that, screening is carried out based on the presence of 2 keywords in the abstract, namely turnover and performance. The next criterion is whether the journal can be accessed or not. The last criterion is to see the relevance of the variables studied.

Data Items and Collection Process

Excel table that will be used to collect all data from selected journals. Items in the data include author, country of origin, country of university, year of publication, journal source, design of research, method of analysis, industry, the relationship of each variable, and results/conclusions of the journal. The review paper was carried out by 2 reviewers. If there is a difference of opinion, what is done is discussion and consultation with a third reviewer.

Analysis Method

The collected data is stored in excel and analyzed simply with the quantity and frequency of data for each date on the item.

Result And Discussion

This review consists of several parts (Figure 1), namely initial search results, screening based on keywords contained in the abstract, articles that have open access, and reviewing articles based on their relationship. The final results obtained after being reviewed as a full paper were 39 articles, so the articles that were not used in this study from the beginning to the end were 1,112 articles. This is because the articles have no relevance to what will be discussed.

Figure 1.Article Selection Process

In the first stage, the results of the initial search from Scopus with the keywords "turnover AND performance" and with a time span starting from 2012 to 2022, were obtained from 1151 articles. After that, screening was carried out based on the keywords contained in the abstract by referring to the two keywords and successfully obtained 166 articles so the articles that were issued due to the absence of a relationship with these keywords were 985 articles. In the third stage, from 166 articles, there are 85 articles available for download. The following step is reviewing articles by looking at the relationship between turnover and performance in each article. Only articles that show the influence of turnover on performance will undergo further review. There are 39 articles that have a relationship between Turnover and Performance. All 39 articles will be reviewed as a full paper. After reviewing the articles in full, 20 articles were found that had a significant relationship between turnover and performance, the remaining 19 articles were excluded because the results obtained in the articles reviewed were not significant or irrelevant (Figure 1).

Figure 2.Year of Publication

Based on what is shown in Figure 2, the publication period of the research year found by the researcher was between 2012 and 2022. Most of the publications with the highest number of articles were in 2020, which was 9 articles. Furthermore, the lowest number of articles published was in 2012, 2014, 2018, and 2022 with 2 articles each year. In 2015 and 2016 there were 4 articles, in 2017 there were 3 articles, in 2019 there were 6 articles, and in 2021 there were 5 articles. The 39 journals were published in 32 publications (Table 1).

No Journal No
1 The Journal of Applied Business Research 3
2 Journal of Vocational Behavior 2
3 International Journal of Financial Research 2
4 Journal Of Financial And Quantitative Analysis 2
5 South African Journal of Business Management 2
6 Journal of Business Economics and Management 2
7 Journal of Hospitality and Tourism Management 1
8 Labor Economics 1
9 MDPI Administrative Science 1
10 Economics and Business Letters 1
11 Acta Commercii – Independent Research Journal in the Management Sciences 1
12 Journal of Management 1
13 SFS The Review of Financial Studies 1
14 Journal of Work and Organizational Psychology 1
15 Journal of Financial Economics 1
16 Problems and Perspectives in Management 1
17 Management & Marketing 1
18 Polish Journal Of Management Studies 1
19 Cogent Business & Management 1
20 Journal of Engineering, Project, and Production Management 1
21 Strategic Management Journal 1
22 Health Care Manage Rev 1
23 International Journal of Recent Technology and Engineering 1
24 Contraduria y Administación 1
25 Research in World Economy 1
26 British Journal of Management 1
27 The International Journal of Human Resource Management 1
28 Frontiers of Business Research in China 1
29 Vitus Interprets 1
30 Human Resources Management Journal 1
31 Association Internationale de Management Strategique 1
32 Journal of Public Administration Research and Theory, 1
Table 1.Publication Journal

There are 13 industries as objects of study from 39 articles reviewed. The most studied industry was Unique Industry (11 articles), followed by Health (3 articles), IT (3 articles), and SME, Hospitality, Finance, Infrastructure, Consulting, Agency, and Service Based Organization with 2 articles each. And the remaining industries, namely Research, Nuclear Power Industry, and School, each have 1 article.

Journal No
The Journal of Applied Business Research 3
Journal of Vocational Behavior 2
International Journal of Financial Research 2
Journal Of Financial and Quantitative Analysis 2
South African Journal of Business Management 2
Journal of Business Economics and Management 2
Journal of Hospitality and Tourism Management 1
Labor Economics 1
MDPI Administrative Science 1
Economics and Business Letters 1
Acta Commercii – Independent Research Journal in the Management Sciences 1
Journal of Management 1
SFS The Review of Financial Studies 1
Journal of Work and Organizational Psychology 1
Journal of Financial Economics 1
Problems and Perspectives in Management 1
Management & Marketing 1
Polish Journal of Management Studies 1
Cogent Business & Management 1
Journal of Engineering, Project, and Production Management 1
Strategic Management Journal 1
Health Care Manage Rev 1
International Journal of Recent Technology and Engineering 1
Contraduria y Administación 1
Research in World Economy 1
British Journal of Management 1
The International Journal of Human Resource Management 1
Frontiers of Business Research in China 1
Vitus Interprets 1
Human Resources Management Journal 1
Association Internationale de Management Strategique 1
Journal of Public Administration Research and Theory, 1
Table 2.Country of Publication

Research locations are spread across Asia, Europe, America, and Africa. The most research is in the US with a total of 12 studies, 4 studies in South Africa, and 3 studies from China. Furthermore, Korea, Turkey, the Czech Republic, and the UK each had 2 studies, and the remaining countries only had 1 reviewable journal study (Table 2).

Figure 3.Type of Journal Research

The majority of articles studied were quantitative. From the 39 studies, 28 studies used quantitative methods, 9 studies used qualitative methods, and 2 studies used SLR/Literature Review research methods (figure 3).

# Author Relationship Significant/Irrelevant Linear / U-Inverted
1 (Guzzo et al., 2022) There is a relationship between turnover and performance Significant Linear
2 (Hu et al., 2022) There is a negative relationship between turnover and performance Not Significant -
3 (Gibbons et al., 2021) There is a negative relationship between turnover and performance. Significant Linear
4 (Yücel, 2021) There is no relationship between turnover and performance Not Significant / Irrelevant Not Significant / Irrelevant -
5 (Akbar et al., 2021) There is a negative relationship between turnover and performance Significant Linear
6 (Hirschi & Spurk, 2021) There is no positive relationship between turnover and performance Not Significant / Irrelevant -
7 (Mabaso et al., 2021) There is no relationship between turnover and performance Not Significant / Irrelevant -
8 (Carpenter et al., 2021) There is no positive relationship between turnover and performance Not Significant / Irrelevant -
9 (Jenter & Lewellen, 2021) There is a relationship between turnover and performance Significant Linear
10 (Renecle et al., 2020) There is no relationship between turnover and performance Not Significant / Irrelevant -
11 (Graham et al., 2020) There is a relationship between turnover and performance Significant Linear
12 (Trunina et al., 2020) There is no relationship between turnover and performance Not Significant / Irrelevant -
13 (Kotaskova et al., 2020) There is no relationship between turnover and performance Not Significant / Irrelevant -
14 (Horváthová et al., 2020) There is no relationship between turnover and performance Not Significant / Irrelevant -
15 (Hussain et al., 2020) There is a relationship between turnover and performance Significant Linear
16 (Osuizugbo, 2020) There is a relationship between turnover and performance Significant Linear
17 (Garg et al., 2019) There is a relationship between turnover and performance Significant Linear
18 (Kaldeen, 2019) There is a relationship between turnover and performance Significant Linear
19 (Jamal, 2019) There is a relationship between turnover and performance Significant Linear
20 (Rivolta, 2018a) There is a relationship between turnover and performance Significant Linear
21 (Yu et al., 2019) There is a relationship between turnover and performance Significant Linear
22 (Gao et al., 2017) There is a relationship between turnover and performance Significant Linear
23 (Shaw & Shi, 2017) There is a relationship between turnover and performance Significant Linear
24 (Burin et al., 2016) There is a significant linear relationship between turnover and performance Significant Linear
25 (Parker & Gerbasi, 2016) There is no relationship between turnover and performance Not Significant / Irrelevant -
26 (Wang et al., 2015) There is a relationship between turnover and performance Significant Linear
27 (Gaertner et al., 2015) There is a relationship between turnover and performance Significant Linear
28 (Burin et al., 2015) There is a relationship between turnover and performance Significant Linear
29 (Korsakienė et al., 2015) There is a relationship between turnover and performance Significant Linear
30 (Durukan et al., 2012) There is a relationship between turnover and performance Significant Linear
31 (Bertelli & Lewis, 2013) There is no relationship between turnover and performance Not Significant / Irrelevant -
32 (Vainieri et al., 2019) There is no relationship between turnover and performance Not Significant / Irrelevant -
33 (Watkins Fassler & Briano, 2019) There is no relationship between turnover and performance Not Significant / Irrelevant -
34 (Guest, 2019) There is no relationship between turnover and performance Not Significant / Irrelevant -
35 (Rivolta, 2018b) There is no relationship between turnover and performance Not Significant / Irrelevant -
36 (Alabdullah et al., 2016) There is no relationship between turnover and performance Not Significant / Irrelevant -
37 (Shipton et al., 2016) There is no relationship between turnover and performance Not Significant / Irrelevant -
38 (Choi & Rhee, 2015) There is no relationship between turnover and performance Not Significant / Irrelevant -
39 (Sohn et al., 2014) There is no relationship between turnover and performance Not Significant / Irrelevant -
Table 3.Relationship between Turnover and PerformanceTable

Based on Table 3, a total of 39 research journals were conducted to examine the relationship between turnover and performance. There are 20 journals that have significant a relationship between turnover and performance.‎ The remaining 19 journals have insignificant or irrelevant results, which means that there is no relationship between turnover and performance, or relationship direction is not turnover to performance.

There are 20 journals that have linear relationship research results. Meanwhile, there is no research that shows a U-inverted relationship between turnover and performance for the last 10 years. The remaining 19 journals did not have any results related to turnover and performance.

This study showed that the popularity the importance of the impact of low turnover on performance had been long neglected. Back to Shaw's study in 2011, Shaw showed that there are more published data on high turnover rates compared to the low turnover rate (Shaw, 2011). Regardless of the argument that low turnover can be an obstacle to performance for the organization (Chad, 2019), academics are more concerned with the high turnover rate.

This trend is quite alarming since the low turnover in the organization might cause a downside to the performance. The ability to innovate will be the first downside. Diversity, insight into new things, the avoidance of group thinking, and insight into best practices might be some of the negative impacts of low turnover. How low the turnover is before it gives a negative impact on the organization should be studied further.

Conclusions

Based on the objectives research conducted, the conclusions of this study are:

  1. Based on research results from the last 10 years, articles discussing the relationship between turnover and performance show a flat graph from 2012 – 2018. Then the level of research experienced a sharp increase in 2020. Articles on turnover and performance than experienced a drastic decline in 2022.
  2. There are 20 journals showing a linear relationship between turnover and performance. The relationship between turnover and performance Shaw (2011) shows that there is a linear and negative relationship between turnover rates and organizational performance. This means that when the turnover rate increases, organizational performance decreases. A higher voluntary turnover rate can interfere with the performance of the workforce. We find that many studies conducted over the last 10 years show support for a negative linear relationship between turnover and performance.
  3. During the last 10 years of research that has been carried out, there is no u-inverted relationship between turnover and performance. Research on u-inverted is still limited in its findings and supporters. The u-inverted perspective has less supporting evidence, which current research should need and suggest.

According to research (Shaw, 2011), the relationship between turnover and performance is U-inverted. But the systematic literature review over the last 10 years shows that there is no academic study to support the u-inverted relationship between turnover and performance. The literature on the u-inverted relationship has been somewhat left behind and has become unpopular.

Suggestions

The authors recommend further research on low turnover rates. What are the impact and the results of low turnover in the company? Will the low turnover rate affect the performance of the company? The authors also suggest that further research discusses deeper about the U-inverted relationship between turnover and performance because research on U-inverted is very limited in its findings and is still lacking in terms of supporters.

Research Limitations

This review has some limitations, such as:

  1. From 10 years duration, the authors only found a total of 39 articles that discuss the influence of turnover on performance. This is due to the limitation of full paper access.
  2. The source used in this study is only the Scopus database. Further study using additional sources might give a new insight.