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Study IDs How Business Turnover Unfolds Amid ‘Unit-Level Shocks’

Pieper Shares How to Diminish Effects of Multiple Employees Leaving
Study IDs How Business Turnover Unfolds Amid ‘Unit-Level Shocks’
Jenna Pieper, associate professor of management, and collaborators studied how the departure of a manager can lead to significant turnover over time. The authors also offered multiple ways to diminish the effects.

A major change in a workplace might lead to significant employee turnover, but companies should be aware that it can play out over time rather than immediately and plan accordingly, a University of Nebraska–Lincoln researcher says.

Collective turnover — multiple employees leaving work units or an organization in close succession — is a topic of increasing interest to industry leaders because it can be destabilizing to have many employees leave at once, said Jenna Pieper, associate professor of management.

Significant collective turnover can be sparked by “unit-level shocks,” or changes that affect many, if not all, employees. Those events, which include mergers, bankruptcies or leadership changes, present different management challenges than turnover sparked by developments that might affect individual employees.

Pieper and her collaborators focused their research on one specific type of shock, the departure of a manager, by analyzing 239 general manager departures from units of a U.S.-based retailer between 2012 and 2014. Their paper, “Collective Turnover Response Over Time to a Unit-Level Shock,” appears in the Journal of Applied Psychology.

Among the team’s findings is that while the departure of a manager, for any reason, can spark turnover, it’s not consistent, immediate or predictable how employees will respond.

“Thinking about how collective turnover can unfold over time is one of the main contributions of this paper,” she said.

Most research in the field has focused on how individual shocks, such as receiving an unsolicited job offer or being denied promotion, influences employee turnover. Less research is available on how collective turnover affects teams and workplace culture.

“If unit-level shocks worked like individually relevant shocks, each employee would independently reassess their unit attachment and follow one of the unfolding model’s shock-relevant paths,” Pieper said. “However, unit-level shocks result in collective action that transcends individuals.”

“As employees seek to reduce uncertainty, they will share information to make sense of a shock and jointly interpret its implications,” the authors wrote.

Individual employees often have their own interpretations and emotions about their manager’s departure. When they share those opinions with colleagues, the group’s appraisal of the situation can take on a life of its own, creating what researchers call “turnover contagion.”

In short, social influences and employees’ reactions become intertwined — and subsequent turnover within a unit can’t be attributed only to individual reasons for leaving the team.

Employees might be surprised or dismayed by a leadership change, but they may not take action at first. Their responses can depend on a variety of factors: how their coworkers respond; the closeness of their reporting relationship to the departing manager; their assessment of how the change might affect their individual prospects with the company; and opinions about the new manager and the job market, to name a few.

Turnover might develop later, though, as those uncertainties become clearer, Pieper said.

Companies should “consider the dynamic effect of collective turnover and realize that it may not all happen at a single point in time, and it may not happen right away,” Pieper said. “We show in the study that there can be a delay. If that happens, companies may have a false sense of security that everything’s OK.”

Additionally, this research identifies a “disruption phase” after a unit-level shock. Thus, rather than examine or expect collective turnover at a single point in time, managers should consider it as dynamic and unpredictable. Turnover can ebb and flow during this time as “job re-evaluation becomes contagious, motivating decisions to quit above and beyond the initial unit-level shock.”

“Just because you don’t have any turnover right now doesn’t mean you won’t have some in a couple of weeks, or in a month or so, that is the result of that shock,” Pieper said.

The circumstances of how a manager leaves are key: whether it’s voluntary, due to an internal promotion, or a termination. How the manager is replaced can be significant, too, especially whether the company picks an internal or external hire.

Pieper and her co-authors listed several steps companies can take to diminish the effect of collective turnover:

  • Plan for a collective turnover that unfolds over time instead of turnover that occurs at a single point in time.
  • Consider where turnover might be concentrated by understanding employees’ proximity to the unit-level shock; that way, managers can focus retention efforts on specific employee groups.
  • Have an effective communication plan. Providing information about why the departure occurred and how it will affect the unit “can reduce uncertainty and help employees make sense of the shock.”
  • Consider that internal promotions to replace a departing manager might suppress turnover.

Pieper said future research should delve into the impact of other types of unit-level shocks on turnover, as well as how trends play out in different contexts and cultures.

Co-authors include Mark A. Maltarich and Anthony J. Nyberg, University of South Carolina School of Business; Greg Reilly, University of Connecticut School of Business; and Caitlin Ray, Cornell University School of Industrial and Labor Relations.

Published: March 14, 2023