employee turnover and operational performance: the moderating effect of group-oriented...

Employee turnover and operational performance:

the moderating effect of group-oriented

organisational culture

David C. Mohr, Gary J. Young, and James F. Burgess, Jr, Center for Organization,Leadership and Management Research, VA Boston Healthcare System; Departmentof Health Policy and Management, Boston University School of Public HealthHuman Resource Management Journal, Vol ••, no ••, 2011, pages ••–••

This study investigates the relationship between overall employee turnover and operational performanceand whether organisational culture is a moderator. Using a sample of 114 outpatient centres from ahealth-care system, we found a strong negative relationship between employee turnover and operationalperformance. Additionally, we found that organisations with a relatively stronger group-orientedorganisational culture did not experience lower operational performance in the presence of high turnover.These findings contribute to the literature on the relationship between turnover and performance.Organisations with persistent high levels of turnover may want to consider developing and adoptingpractices that are consistent with a group-oriented organisational culture.Contact: Dr David C. Mohr, VA Boston Healthcare System (152M), 150 South Huntington Ave,Boston, MA 02130, USA. Email: [email protected]_159 1..18

INTRODUCTION

Asubstantial body of organisational literature is concerned with employee turnover (Homand Griffeth, 1995; Maertz and Campion, 1998; Griffeth et al., 2000; Griffeth and Hom,2003; Glebbeek and Bax, 2004; Barrick and Zimmerman, 2005; Holton et al., 2005). Much

of this literature focuses on the causes of employee-initiated turnover with considerableattention paid to such factors as employee satisfaction, intention to leave, organisationalcommitment and job alternatives. These and other factors have been included in varioustheoretical models, such as the intermediate linkage model (Mobley, 1977), the unfolding modelof turnover focusing on process (Lee and Mitchell, 1994), and the process-content integrationmodel (Maertz and Campion, 2004), to explain why employees leave organisations.

However, while the causes of turnover have been investigated in considerable depth, thereis a smaller but growing body of research devoted to its consequences (Shaw et al., 2005; Meierand Hicklin, 2008; Ton and Huckman, 2008). These efforts have documented direct costs ofturnover, such as recruiting and training new employees, and these costs appear to beconsiderable (Cascio, 1987; Waldman et al., 2004). Studies that have examined turnover as apredictor variable have found a negative association between turnover rates and variousperformance indicators regarding customer service and profitability (Koys, 2001; Shaw et al.,2005; Kacmar et al., 2006; Hurley and Estelami, 2007).

In this article, we report results from a study that contributes to this developing line ofturnover research in two respects. First, our study investigated the effects of turnover in anorganisational setting characterised by knowledge workers, specifically, nurses working inhealth-care organisations. By knowledge workers, we mean individuals who are involved in theuse of specialised knowledge or skills (Ware and Grantham, 2007). Prior studies have tendedto focus on turnover in organisations that heavily comprise what some researchers refer to as

doi: 10.1111/j.1748-8583.2010.00159.x

HUMAN RESOURCE MANAGEMENT JOURNAL, VOL •• NO ••, 2011 1

© 2011 Blackwell Publishing Ltd.

Please cite this article in press as: Mohr, D.C., Young, G.J. and Burgess, J.F., Jr. (2011) ‘Employee turnover and operational performance: themoderating effect of group-oriented organisational culture’. Human Resource Management Journal doi: 10.1111/j.1748-8583.2010.00159.x

service workers, such as those in fast food restaurants, hospitality settings and bookstores orconvenience stores (Shaw et al., 2005; Kacmar et al., 2006; Ton and Huckman, 2008; Hausknechtet al., 2009). Service workers typically provide tangible services or products, have limiteddiscretion in doing their work and have been trained towards a common approach for handlingall customers. The findings and applications, however, may not necessarily be generalisable toknowledge workers as research findings are sensitive to type of group studied and context(McGrath, 1986).

In comparison, knowledge workers often deliver intangible services in situations that requirethem to personalise or tailor their services to meet the different needs and expectations of theircustomers. Moreover, many of the tasks they perform are unstructured and complex andrequire collaboration and information sharing with other experts (Roy et al., 2001). As such, thejob tasks of knowledge workers do not follow a fixed decision sequence. Although mostoccupations entail some mix of standardised and non-standardised tasks, nurses generally havetasks that require a considerable degree of decision-making discretion and thus cannot easilybe standardised (Weston, 2008; Jost et al., 2010). The recently legislated Patient Protection andAffordable Care Act will encourage and incentivise health-care organisations to increase therole of nurses in delivering primary and preventive care and encourages nurses to return toschool to learn these skills (Carlson, 2010), which will also be important in improving carecoordination. Accordingly, while employee turnover is generally assumed to have a negativeeffect on organisational performance, we lack a clear understanding of the relationship betweenturnover and performance when knowledge workers are involved.

Second, we investigated a theoretically based perspective for the role of group-orientedorganisational culture and the extent to which it moderates the relationship between turnoverand operating performance. To date, little research has considered whether some organisationsmay be more or less vulnerable to the potential toxic effects of turnover based on their internalor external characteristics. By identifying such characteristics, it may become possible fororganisations to develop and adopt specific strategies that alleviate the harmful effects thatresult from employee turnover.

Our investigation draws from and integrates human capital and social capital theories toexamine if organisational culture moderates the relationship between turnover andperformance for knowledge-based workers. In this vein, it should be noted that a keydistinction exists between explicit knowledge and tacit knowledge that is relevant to the studyof turnover among knowledge workers (Polanyi, 1996). Explicit knowledge is information thatcan be written as part of the rules and policies of an organisation and thus is relatively easyto transfer from one person to another. By contrast, tacit knowledge consists of the set of‘mental models’ employees have about the organisation and its procedures. This type ofknowledge typically cannot be transmitted in writing or in classroom training and so is usuallyacquired by employees only through work experience at an organisation. Transfer of tacitknowledge between people can be slow, costly and uncertain (Kogut and Zander, 1992; Grant,1996). From the perspective of the knowledge-based theory, turnover can cause operationaldisruptions during the period of time when replacement employees are trying to acquire thetacit knowledge needed to perform their jobs.

Turnover and organisational performance

As noted, in considering the relationship between turnover and organisational performance, werefer to human capital (Kacmar et al., 2006; Hurley and Estelami, 2007) and social capitaltheories (Dess and Shaw, 2001; Shaw et al., 2005), both of which have been advanced to explainwhy turnover may negatively affect an organisation’s performance. Human capital is the sum

Employee turnover and operational performance

HUMAN RESOURCE MANAGEMENT JOURNAL, VOL •• NO ••, 20112


of an individual’s knowledge and skills applicable to the work process for an organisation. Itcan be increased through formal training and education as well as in practice as part of workexperiences. Human capital can be task specific (Gibbons and Waldman, 2004) and can beattained by acquiring complex cognitive skills through extended deliberate practice (Ericssonet al., 2007).

While human capital theories focus on the worker’s skills and knowledge developedformally or informally and tacitly or explicitly as a valuable resource, the social capitalperspective focuses on relationships among individuals as a valuable resource. Social capital isa network of interpersonal relationships that one can use to benefit himself or herself or anorganisation. Such networks can facilitate the development and application of knowledge.Greater transfer of knowledge has been found to occur through social networks as a functionof the extent to which an organisation supports formal and informal interactions amongindividuals or groups (Sammarra and Biggiero, 2008). Individuals are more willing to sharetacit knowledge with people they trust and with whom they have close social connections(Hansen, 1999; Uzzi and Lancaster, 2003).

Social capital focuses on the ‘goodwill’ that people develop with one another such that afavour done for someone today is made in the tacit understanding that the favour will bereturned at a later date (Adler and Kwon, 2002). The extent to which members in the networkare connected allows information to be more easily exchanged. Accordingly, social capital canbenefit organisations by increasing communication efficiency (Leana and Van Buren, 1999).However, social capital, and the facilitation of information among people, is disrupted whenpeople leave the social network (Koys, 2001; Kacmar et al., 2006).

From both human capital and social capital perspectives, turnover may be particularlyproblematic for organisations with knowledge workers. In these organisations, there is oftena need for some individualisation or customisation of the service to meet customer needsand requests. The more the organisation must customise services, the more it will rely onthe tacit knowledge of its employees to manage their activities to achieve the desiredcustomisation (Hansen et al., 1999). New employees will typically lack this knowledge andas a result will be more prone to mistakes or delays in seeking information (Hausknechtet al., 2009), which, in turn, will have a detrimental effect on organisational performance. Thechallenge of transferring tacit knowledge is that much greater in organisations withrelatively high turnover as it inevitably takes time for new employees to develop strongsocial networks (Day, 1994).

Existing research on teams supports this line of logic regarding turnover and performance.For example, greater stability in team membership was associated with faster learning of newskills and procedures (Edmondson, 2003). Teams that experienced greater turnover took longerto learn new skills and procedures (Edmondson et al., 2003). The longer teams have beentogether, the better they appear to be able to match tasks to the most qualified members basedon accumulated knowledge of the strengths and limitations of each member (Reagans et al.,2005) and appear to develop their own language and ways of communicating that may enhancetheir performance (Weber and Camerer, 2003).

Thus, high turnover can interfere with performance in knowledge-based settings becausenew employees lack the requisite tacit knowledge required to perform their jobs effectively andbecause it disrupts social network composition in ways that dilute available sources of tacitknowledge. Our first hypothesis is as follows:

Hypothesis 1: In organisations using knowledge workers, the employee turnover rate isnegatively related to operational performance.

David C. Mohr, Gary J. Young and James F. Burgess, Jr



Group-oriented organisational culture as a moderator

As discussed, turnover can be disruptive. One approach used to manage turnover and potentialnegative effects is to standardise the job tasks to reduce the need for tacit knowledge.Standardisation may emphasise strict adherence to company manuals, policies and procedures,scripted responses to common customer questions, and greater oversight of work. In settingssuch as fast food or convenience stores, customers expect consistent interactions. Inorganisations with knowledge workers, however, it is not possible to standardise all the tasksor anticipate all future work requirements. Customers are more likely to have more complex orindividualised needs and will tend to expect that the workers will draw on that knowledge totailor and contextualise services. As standardisation is limited in knowledge-based settings, it isimportant that tacit knowledge is readily available. We draw from social capital perspectives todiscuss how a group-oriented culture may foster an environment where individuals have a richnetwork of information that allows greater tacit knowledge transfer among employees.

In theory, the moderating effect of a group-oriented organisational culture on turnover ispotentially rooted in the organisational practices and values associated with such a culture. Agroup-oriented culture emphasises employee belongingness and participation (Quinn andRohrbaugh, 1981). It also emphasises giving positive feedback and encouragement toemployees about their work (Glaser and Zamanou, 1987). As a result, in this type of cultureemployees are more likely to develop close working relationships with one another that fostersmutual trust, commitment and loyalty (Dani et al., 2006). Such trust and loyalty amongemployees, which is a particularly central concept in the social capital perspective, is animportant factor in the transfer of tacit knowledge. Transfer of knowledge generally requires ahigh level of trust and security in the workplace. Employees are more willing to shareinformation when they trust one another (Roberts, 2000). Higher levels of employee trust of theteam were found to be positively related to knowledge transfer (Foos et al., 2006). A strongerinternal social network is associated with greater range of knowledge variety within the team(Wong, 2008). This will make the information that employees departing the organisation takewith them more evenly distributed among remaining members (Tsoukas, 1996). In a recentmeta-analysis, information sharing was related to higher team performance and cohesion(Mesmer-Magnus and DeChurch, 2009).

A group-oriented organisational culture also emphasises mentoring, so that new employeesentering an organisation are supported and guided by more experienced co-workers. When anew employee starts in a new job, the team would want to bring the level of knowledge forthe new hire to a competency level that would be effective for the job role in dealing withcustomers and others on the team. If the organisation does not have a culture that emphasisescollaboration and cohesion, the tacit knowledge required for effective job performance willmove relatively slowly in reaching new employees. In a culture that emphasises competitionwithin work units or emphasises negative consequences, such as being fired based on rankings,co-workers could be less likely to share job-relevant information. This would cause eachemployee to ‘rediscover the wheel’ rather than learning from best practices and may impedeoverall performance. Therefore, an organisation emphasising group-oriented organisationalculture should also see greater transfer of tacit knowledge among employees.

While social capital theory discusses the value of networks, it does not address the factorsthat may facilitate or impede the accessibility of such networks to employees. A group-orientedorganisational culture should facilitate access to networks allowing for both greater exchangesof information and knowledge among employees. In this respect, a group-oriented cultureserves as an important component of the social capital of an organisation. To the extent an




organisation fosters trust and interpersonal relationships, this may facilitate transfer ofknowledge efficiently and effectively and disruptions in operational performance due toturnover of employees should be minimised. Thus, we propose our second hypothesis:

Hypothesis 2: The strength of an organisation’s group-oriented culture will moderate therelationship between organisational turnover and operational performance, such that thenegative relationship between turnover and performance decreases as the strength ofgroup-oriented culture increases.

Figure 1 presents the theoretical model we are testing.

METHODS

Setting

We focused on the turnover of registered nurses providing outpatient care at medical centreswithin the Veterans Health Administration, which is the health-care delivery component of theDepartment of Veterans Affairs (VA). Registered nurses represent approximately a fifth of thetotal workforce. A majority of these nurses work in the outpatient centres as an increasingnumber of services and procedures are provided in this setting. We obtained outpatient datafor 114 medical centres.

We selected this organisational setting for two reasons. First, in outpatient centres, the job tasksof registered nurses largely constitute knowledge-based work. Although nurses do follow ordersprescribed by physicians, nurses have considerable autonomy, self-governance and influence inthe management of patient care services (Center for Nursing Advocacy, 2006; Jost et al., 2010).Some of the unique skill sets that nurses provide include coordinating the path of care for patientswith complex medical needs, such as coordination of transfers and discharges from inpatientsettings, and counselling patients in self-care management strategies. Nurses are involved in andparticipate in most of the tasks of occupationally distinct team members (Best et al., 2006) andtypically have the best idea of how work is to be conducted and coordinated, making them keyindividuals within the social network. Also, in health care it is well recognised that work activitiescannot be completely or even substantially standardised as there always exists uncertainty as towhether and how patients respond to clinical interventions and education. Accordingly, nurseshave considerable decision-making discretion in their work and have the professional and legalauthority to ensure the care prescribed is in the patient’s best interest (Center for NursingAdvocacy, 2006). In this particular VA setting, the nursing executive is mandated to be part of the

FIGURE 1 Hypothesised relationships in the study

TurnoverOperational performance• Customer service• Waiting time

Group-oriented culture

H 1: (-)

H 2: (+)




executive-level decision making along with the physician executive. In addition, for several yearsthere has been a substantial shortage of registered nurses in the US, which has made nurseturnover a particularly important policy problem (Rosseter, 2010).

Measures

Performance We assessed performance based on two measures of operational effectiveness: acustomer service measure and appointment waiting time. We selected both of these measuresbecause they are highly relevant to the performance of an outpatient unit and are alsoinfluenced directly by the work activities of nurses.

For the customer service measure, we used a standardised measure that focuses on howeffectively services are coordinated. Poor service coordination is associated with duplication ofemployee efforts and lost time leading to greater costs, delays in service being provided(Schoen et al., 2006), critical and timely information not getting to the right people (Gandhi,2005), and errors in services and products delivery (Moore et al., 2003).

The customer service measure for operational performance was obtained from a VA nationaldatabase for 2006 for an outpatient satisfaction survey. The response rate for the survey was 56per cent (n = 248,850). The average number of responses for each outpatient clinic used in thestudy was 1,765 (SD = 825). The survey is based on the NRC Picker ambulatory care survey andcontains five items. An example item from that scale asks, ‘Did someone tell you when youwould find out the results of your test?’ Each of the items refer to customer-oriented servicesthat would be handled either directly by nurses or indirectly through their supervision andcoordination with other clinical staff members in their unit or other units within the medicalcentre. The Cronbach’s alpha value for the scale was 0.81. Before aggregating to theorganisation level, the national reporting office adjusts scale scores to account for the influenceof patient health status and age – patients of greater age and lower health status generallyrequire greater utilisation of services. We used the adjusted scores for our analyses.

The waiting time measure was the average length of days between when a patient made arequest for an appointment and the third next available appointment opening, which reflectsa more accurate assessment of appointment availability (Murray and Berwick, 2003). Consistentwith previously noted turnover studies, we used waiting time as an objective measure of theoperational performance. In health-care settings, longer waiting times have been found to benegatively associated with other performance measures including hospitalisation and mortality(Prentice and Pizer, 2007, 2008) and thus represent an important outcome to study as a measureof operational performance.

The waiting time measure is sensitive to nurse turnover for at least two reasons. First, althoughthe actual scheduling of appointments for outpatient care is handled by clerks, the clinic nursesplay an important role in managing the appointment process by helping to estimate the numberof patients that can be seen in a given day and the number of available slots to keep open forurgent care (Stewart et al., 2004). The estimates the nurses make are likely to improve withexperience as nurses increase their tacit knowledge of local factors that can influence servicedemand (e.g. flu season, increased demand in Southern medical centres during the winter season)and the time required for delivering services (e.g. new group of interns or residents that need tobe better supported). Second, nurses are also involved with oversight of patient visits to the clinic.For patients with a more complex medical condition(s), nurses are more likely to contact thepatient to remind him or her to attend the scheduled appointment. During the call, the nurse mayalso take note of any new issues or concerns expressed by the patient and relay this informationback to the provider. The reminder call process can lead to lower no-show rates, thereby reducingthe need for rescheduling appointments and lowering the overall waiting time for appointments.




Turnover We obtained 2005 nurse turnover data at the outpatient centre level from an internaldatabase that has been used in other turnover studies (Mohr et al., 2008). Rather than focus oneither voluntary or involuntary turnover, we selected overall turnover as our study focused onhow service coordination may be disrupted when people leave the organisation. We clarifiedwith HR that the termination rate for nurses was less than 1 per cent; thus, most of theemployees left voluntarily. This is one of the organisational contextual issues, which means thatresearch results could vary across settings. Turnover was computed as the number of employeedepartures over the last 12 months divided by the average number of annual employees(full-time equivalent employees). The 12-month time frame is typically used in studies onturnover (Hurley and Estelami, 2007). We computed a natural log-transformation on turnoverrates as is commonly done in other turnover studies (Hurley and Estelami, 2007). For oursample, the turnover rate for registered nurses was 10.6 per cent, which is slightly higher thana recent study that found the rate to be 8.4 per cent for this occupational group in publichospital settings (PricewaterhouseCoopers’ Health Research Institute, 2007).

Group-oriented culture The culture measure for this study is based on a modified version ofthe Competing Values Framework (CVF) (Quinn and Rohrbaugh, 1981; Cameron and Quinn,1999). The measure was collected as part of a larger survey in 2006 assessing individual,workgroup and organisation-wide employee attitudes. The subscale for group-oriented cultureconsist of three items: (a) managers in my facility are warm and caring; they seek to developemployees’ full potential and act as their mentors or guides; (b) The glue that holds my facility togetheris loyalty and tradition; commitment to this facility runs high; and (c) my facility emphasises humanresources. High cohesion and morale in the organisation are important. Respondents indicated theiragreement for each item on a five-point scale from strongly disagree to strongly agree. Theresponse rate for the 2006 survey was 70 per cent with more than 108,000 employee responses.The number of respondents at the medical centres ranged from 208 to 2,771 with an averageof 1,040 respondents (SD = 569). Cronbach’s alpha for the scale items was 0.83.

Our measure of group-oriented culture has conceptual and empirical support asdemonstrated in previous research examining the CVF culture framework (Kalliath et al., 1999).Although some research suggests that group-oriented culture may be part of a largerorganisational culture construct (Helfrich et al., 2007), other studies have reported resultsshowing group-oriented culture is independently a strong predictor of HR measures (Mohret al., 2008; Gregory et al., 2009; Park and Kim, 2009). For example, one study reportedgroup-oriented culture was associated with lower voluntary turnover for registered nurses andphysicians (Mohr et al., 2008). Another study using a similar measure of group-oriented culturefound that the measure was associated with higher job satisfaction and lower turnoverintention for nurses in Korea (Park and Kim, 2009). An additional study reported thatgroup-oriented culture was associated with higher employee satisfaction in US hospitals(Gregory et al., 2009).

We used responses of all employees who work in the medical centre to measure the culturevariable used in the model. Because we were looking to assess how the culture of theorganisation related to outcomes, we used group-oriented culture ratings from all employees.The culture of the medical centre will influence how the whole system works together withemployees in different settings. The majority of employees worked in an outpatient centre.Additionally, as noted, outpatient nurses are responsible for coordinating the care of thepatients across different areas (e.g. inpatient setting, diagnostic settings) of the medical centre.The correlation for group-oriented culture for employees in the outpatient centre and theoverall organisation was 0.90.




Context variables Based on prior studies, we adjusted for medical centre characteristics thatare potentially associated with the operational performance (Young et al., 2000; Meterko et al.,2004). We adjusted for geographic location using four regions of the US (i.e. Northeastern,Central, Western and Southern). Variables were dummy-coded as 0 or 1 and the Southern groupwas the referent. We also controlled for the complexity of the medical centre as greatercomplexity potentially presents challenges to operational performance. VA has classifiedmedical centres into three major categories based on seven criteria including patient, provider,medical education and research characteristics (VHA Facility Complexity Workgroup, 2005). Wecoded medical centres as being in the ‘most complex’, ‘moderately complex’, and ‘leastcomplex’ group using dummy-coded values of 0 and 1, with the least complex group being thereferent. Finally, we also controlled for the total number of employees within the medical centrebecause a larger workforce could make it harder for employees to transfer knowledge andcoordinate activities among each other.

Data aggregation

Because data on group-oriented organisational culture and customer service were aggregatedfrom individual responses to the level of the medical centre, we calculated aggregation statistics(James et al., 1984; Bliese, 2000). We found the within-group agreement statistics rwg(j) forgroup-oriented organisational culture to be 0.79 and for customer service to be 0.80, which canbe considered an acceptable value. To further justify aggregation, we calculated the values ofthe intra-class correlation coefficients, ICC(1) and ICC(2). We found an ICC(1) value of 0.03 fororganisational culture and a value of 0.02 for customer service, indicating the percentage ofvariance that can be attributed to between-organisation differences. For ICC(1), larger values,such as 0.08 or greater, are generally preferred because larger values indicate that fewerresponses are needed to obtain a reliable estimate of the average level of the measure withinthe group. A larger group size will lead to higher ICC(2) values and indicate a reliable estimateof aggregation (Bliese, 1998). Our study did have a large average number of respondents perunit of observation. We found the reliability of group means was 0.97 for both measures forICC(2), greater than the suggested value of 0.70; thus, results supported data aggregation.

Analysis

We first examined bivariate correlations among our study variables. Next, we examined thelagged effects of overall turnover on customer service and waiting time. This is consistent withprior research on employee turnover and organisational performance (Anderson et al., 1994;Kacmar et al., 2006; Hurley and Estelami, 2007). By lagging scores, we were able to reduce anyendogeneity bias that may lead to alternative hypotheses that employee turnover may be dueto customer dissatisfaction with operations or that lower waiting time could create moredemand for future visits.

We conducted a three-step hierarchical regression analysis for each outcome variable. In thefirst step, we entered only our control variables. In the second step, we entered turnover andgroup-oriented organisational culture to test for main effects of each variable. In the third step,we entered the interaction term between turnover and group-oriented organisational culture.We centred both turnover rates and group-oriented culture when testing the main effects andthe interaction effects (Aiken and West, 1991). We also created graphical depictions of therelationships when the interaction term was significant.

Although turnover has generally been assumed to have a negative effect on the generalperformance of organisations, some theorists have suggested that it may also have functionalbenefits (i.e. departure of less productive or less committed employees) within certain limits




(Dalton et al., 1981; Siebert and Zubanov, 2009). Additionally, to assess if some amount ofemployee turnover can be functional for achieving better performance, we tested for a curvilineareffect for the turnover variable relative to both measures of operational performance. Specifically,we examined the statistical significance of the non-transformed quadratic term for turnover.

RESULTS

We first examined the bivariate correlation among predictor and dependent variables ofinterest. Turnover was negatively associated with the customer service measure (r = -0.21,p < 0.05) and positively correlated with waiting time (r = 0.20, p < 0.05). The correlation betweenthe customer service and waiting times was negative (r = -0.24, p < 0.05). We present thedescriptive statistics and correlation matrix in Table 1.

We present results from the regression analyses for customer service in Table 2. As predicted,the relationship between turnover and the customer service measure was significant andnegative; turnover explained an additional 4 per cent (p < 0.05) of variance and group-orientedorganisational culture explained an additional 3 per cent (p < 0.05) of variance in the secondstep. This finding supported our first hypothesis that turnover would be associated withoperational performance. The interaction term was significant in the third step of the model andexplained 3 per cent more variance. The total model variance explained was 0.36. Therelationship between turnover and customer service was negative when group-oriented culturewas relatively weak and became non-significant as the strength of group-oriented cultureincreased. In testing for a curvilinear effect, we did not find a significant relationship for thenon-transformed quadratic turnover variable (p = 0.13).

To further interpretation, we plotted the interaction between group-oriented organisationalculture and turnover. Figure 2 shows the results for customer service. We used plus and minusone standard deviation lines in creating the figures. We performed a simple slope analysis(Aiken and West, 1991) for each regression line to test if the slope was significantly differentfrom zero. Based on the regression, we used standardised estimates of -0.20 for turnover, 0.28for organisational culture and 0.17 for the interaction term. In line with Hypothesis 2, we foundthat organisations with a high mean score for group-oriented organisational culture did notexperience lower customer service scores when turnover was high, but organisations with alow mean score for group-oriented organisational culture did experience lower scores.

We present the regression analyses for waiting time in Table 3. In the second step of themodel, turnover explained an additional 3 per cent (p < 0.05) of the variance, but group-oriented organisational culture was non-significant. In the third step, we found the interactionterm explained 2 per cent additional variance but was non-significant (p = 0.10). The totalvariance explained in the model was 22 per cent. In testing for a curvilinear effect, we did notfind a significant relationship for the quadratic turnover variable (p = 0.48).

DISCUSSION

This study adds to a small but growing body of research that investigates the impact ofemployee turnover on operational performance (Ton and Huckman, 2008; Hausknecht et al.,2009). The study contributes to the literature by examining how operational performance, asassessed by customer service perceptions and waiting time, is affected by the turnover ofknowledge workers in a health-care context. The study also makes a unique contribution bytesting the role of a moderator variable, group-oriented organisational culture, as a way tomitigate the negative effects on performance that may arise from employee turnover.




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TABLE 2 Results of regression analyses for customer servicea

Variables Model 1 Model 2 Model 3

b s.e. b s.e b s.e.

Intercept 84.95 (0.68) 85.07 (0.66) 85.07 (0.65)Most complex -2.55** (0.83) -2.64** (0.80) -2.72** (0.78)Moderately complex -1.16 (0.74) -1.46* (0.71) -1.45* (0.70)Northeastern region 2.38** (0.69) 2.30** (0.66) 2.00** (0.66)Central region 2.31** (0.65) 2.35** (0.63) 2.38** (0.62)Western region 0.42 (0.77) 0.17 (0.74) 0.10** (0.73)Staff size per 1,000 -0.42 (0.26) 0.36 (0.25) 0.42 (0.24)Turnover (log)b -1.34* (0.56) -1.03* (0.57)Group-oriented culture 3.59* (1.50) 4.07** (1.49)Turnover (log) ¥ culture 7.05* (3.29)F 6.09 6.40 6.42df 6,106 8,104 9,103Total R2 (DR2 for step) 0.26** 0.33** (0.07*) 0.36** (0.03*)

* p < 0.05, ** p < 0.01.a Unstandardised regression coefficients are reported. Standard errors are in parentheses.b Variable is centred.

FIGURE 2 Culture and turnover interaction for customer service

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Low group culture

High group culture




Our findings provided partial support for our hypotheses. Specifically, our study found thatgreater employee turnover was associated with lower customer service and higher waiting times.We also found support for the hypothesis that group-oriented organisational culture moderatesthe effect of turnover on customer service. The interaction term did not meet a 0.05 level ofsignificance for the waiting time model, but the direction of the effect was in the hypothesiseddirection. As a performance measure, waiting time is likely to be less sensitive to employeeturnover than is customer service. Several operational factors that we were unable to measuremay have influenced waiting times including patient demand for appointments and hours ofclinic operation. As such, these factors may be important to control for in further research.

Theoretical and practical implications

A key theoretical implication of our study concerns the potential role of certain organisationalcharacteristics to moderate the turnover–organisational performance relationship. To date, littletheory or research has been devoted to this area of inquiry. The results of our study indicatethe need for more research to identify other characteristics that may potentially moderate theeffects of employee turnover. Through such research, it will be possible to develop morecomprehensive and integrated theoretical models on the turnover and performancerelationship. Based on our findings and those of Ton and Huckman (2008), a key point ofdeparture for such models may be whether and to what degree work activities can bestandardised. Standardisation of work activities can greatly facilitate the assimilation of newemployees because the information that these employees need to know to perform their jobsis codified. Too much standardisation, when customers expect tailoring and context-drivenservices, could lead to lower customer service and performance. For organisations whereopportunities for standardisation are limited, which, in addition to health-care organisations,

TABLE 3 Results of regression analyses for waiting timea

Variables Model 1 Model 2 Model 3

b s.e. b s.e b s.e.

Intercept 22.61 (2.55) 21.96 (2.54) 21.99 (2.53)Most complex 10.03** (3.10) 10.09** (3.07) 10.29** (3.05)Moderately complex 4.32 (2.78) 4.94 (2.77) 4.91 (2.75)Northeastern region -1.63 (2.55) -1.33 (2.52) -0.56 (2.56)Central region -4.54 (2.44) -4.67 (2.41) -4.73* (2.39)Western region 3.46 (2.89) 3.98 (2.87) 4.15 (2.88)Staff size per 1,000 -1.44 (.96) -1.24 (.94) -1.43 (.95)Turnover (log)b 4.20* (2.14) 3.33 (2.21)Group-oriented culture -6.26 (5.80) -7.63 (5.84)Turnover (log) ¥ culture -19.26 (12.80)F 3.59 3.40 3.31df 6,108 8,106 9,103Total R2 (DR2 for step) 0.17** 0.20** (0.03*) 0.22** (0.02)

* p < 0.05, ** p < 0.01.a Unstandardised regression coefficients are reported. Standard errors are in parentheses.b Variable is centred.




includes consulting firms, pharmaceutical companies, software development companies, andeducational institutions, there exists the challenge of transferring tacit knowledge to newemployees in an efficient and effective manner.

Our findings may be particularly relevant for organisations that deliver services with highlevels of customisation. If service customisation is an important contextual factor, success maydepend on the ability of the organisation to implement HR practices (e.g. performancemanagement and rewards systems) that do not encourage internal competition amongemployees (i.e. ‘rank-and-yank’). For example, a reward system that encourages a high degreeof competition among employees may impede transfer of tacit knowledge if employees arelooking to maintain a competitive advantage over their co-workers.

Our study offers practical implications for managers confronted with high employeeturnover. Indeed, shortages of skilled workers are not strictly a ‘health-care-only’ problem asthere are other growing shortages of skilled knowledge workers in other sectors of theeconomy. Certainly, managers may not be able to stop all employee departures, but they maybe able to control or neutralise the negative effects of such departures. As noted, how amanager controls the negative effects of turnover may depend on the extent to which tasks canbe standardised. Research suggests that standardisation of tasks may be an effective moderatorof the turnover and performance relationship (Ton and Huckman, 2008). In organisationsrelying on knowledge workers, however, where the potential to standardise tasks is limited, thedevelopment and adoption of techniques for implementing a group-oriented culture may be amore effective way to manage the impact of employee turnover. Most organisations have jobsthat entail a mix of standardised and non-standardised tasks. Where this is the case, it may bemost productive for an organisation to balance efforts to standardise tasks with efforts tostrengthen group-oriented organisational culture rather than focusing exclusively on eitheractivity. Finding the right balance may depend on the context and tasks inherent in theorganisation and its activities.

The extant literature points to a number of approaches for developing, adopting andmaintaining a group-oriented organisational culture. For example, the introduction of aparticipative empowerment process, using a group-oriented approach to work structure,allowing greater employee autonomy, and holding weekly quality improvement meetings werepractices associated with more satisfaction and a stronger culture (Morley and Heraty, 1995).

An approach for building social and/or human capital entails pairing new employees orjunior staff with more senior members as part of the employee orientation process or mentoringprocess. Job rotation is another way that employees can develop new knowledge and skills,both tacit and explicit, by being exposed to a wider range of job duties and a wider range ofindividuals in the organisation (Campion et al., 1994).

Although the results of our study suggest that group-oriented culture can mitigate the toxiceffects of turnover on performance, organisations certainly have strong incentives to minimiseemployee turnover. Although, we did not observe a significant correlation between group-oriented culture and turnover among nurses (see Table 1), other studies have suggested thatorganisational culture can minimise the turnover of nurses, specifically voluntary turnover andintention to leave (Mohr et al., 2008; Park and Kim, 2009). Innovation has also been suggestedas an important workplace factor that can minimise turnover among nurses (Cohen et al., 2009).One study found a positive association between employee ratings of their opportunities forlearning and their intentions to remain with their organisation (Ng and Butts, 2009).Organisational efforts to increase group-oriented culture, innovation and learning opportunitiesmay be a particularly salient characteristic that influences voluntary turnover decisions amongknowledge workers.




Future research considerations

In this vein, group-oriented culture may be one of several moderators that researchers shouldexamine to understand when employee turnover is most likely to be harmful to performance.One potential moderator may be new employee socialisation or orientation programmes. Byhaving a new employee work closely with or shadow a senior employee, it may lead to greaterrates and amounts of tacit knowledge transfer, which could help contain any operationaldisruption resulting from employee turnover. In one study, the interaction between thepercentage of new employees and turnover rates was a moderating factor for customer serviceratings (Hausknecht et al., 2009). This finding may suggest that providing training to newemployees may be an effective way to reduce disruptions in service operations caused byturnover.

Organisational commitment may also be an important moderator. Committed employeesmay be more willing to and capable of transferring tacit knowledge to new employees as partof stewardship. This may be particularly important for knowledge workers because they mayexhibit stronger organisational commitment (Cohen and Hudececk, 1993). Organisationalcommitment was noted as a potential moderator between the extent of tacit knowledge sharingand organisational justice (Lin, 2007).

Another area for theoretical investigation is organisations that are not experiencing turnoverbut are seeing high rates of growth and adding new employees, such as a small business orstart-up organisation expanding to a higher growth and volume company (Kazanjian, 1988). Ifan organisation is able to develop a culture that emphasises teamwork and cohesion, this mayallow the new employees to both learn the relevant skills and help the organisation besuccessful.

Limitations

Our study has several important limitations. First, the study employs a particular class ofknowledge workers (nurses) in a single setting (outpatient services) to assess the effects ofturnover. Second, we used models of human capital and social capital to explain the natureof the relationships but did not directly assess either component directly. While, as noted, priorresearch on turnover has used these models, a more integrated analysis of these theories wouldprovide greater insight into the effects of turnover. For example, a more direct assessment ofhuman capital might take into consideration the years of experience and level of education forthe nurses working in outpatient centres as this has been identified as an important factor inpatient mortality (Aiken, 2003). The social capital component could be assessed by examininglevels of trust and information sharing among employees within organisations. Third, ourmeasure of waiting time can be influenced by environmental factors outside of the control ofnurses, such as natural variations in demand for appointments or the supply of appointmentslots. Although nurses do play an important role in helping their organisations adjust to suchshifts in demand, some organisations may face more frequent and/or powerful shifts thatintroduce some level of bias to this measure of operating performance.

CONCLUSION

In conclusion, our current investigation of turnover, group-oriented organisational culture andperformance indicates that employee turnover does have a negative effect on operationalperformance in organisations with knowledge workers but that organisations with stronggroup-oriented organisational cultures are somewhat protected from these negative effects.




Acknowledgements

The views expressed in this article are those of the authors and do not necessarily reflect theposition policy of the Department of Veteran Affairs or the United States government. Thismaterial is based upon work supported by the Department of Veteran Affairs, Veterans HealthAdministration, Office of Research and Development, Health Services Research andDevelopment for IIR 05-221. We are grateful for their support. We also extend a special note ofthanks to Marjorie Nealon Siebert.

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