“I Quit!” Predicting When and Why Employees Quit
By Ashley Goreczny, Sarang Sunder and V. Kumar
Rather than working employees to the point of burn-out 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?”
In an upcoming publication in the Journal of Marketing Research, our research team at the Center for Excellence in Brand and Customer Management explores the drivers of quitting behavior among salespeople.
Consider a managerial dilemma, as shown in Figure 1 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?
After studying two years of data on thousands of salespeople using state-of-the-art statistical techniques, our team has 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.
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.
The research article will be available later this year in the Journal of Marketing Research, under the citation: Sunder, S., Kumar, V., Goreczny, A., & Maurer, T. (2017). Why do Salespeople Quit? An Empirical Examination of Own & Peer Effects on Salesperson Turnover Behavior.
Ashley Goreczny is a Ph.D. candidate in the J. Mack Robinson College of Business under V. Kumar, Regents Professor and executive director for the Center for Excellence in Brand and Customer Management. Sarang Sunder was a doctoral researcher in the center and graduated in 2015 from Georgia State University with a Ph.D. in marketing.