Turnover of Personnel in the Federal Government
A voluntary or involuntary movement across the membership boundary of organization through quits, transfers, layoffs, promotion, reduction in force, deaths, or retirement.
Employing 2.2 million workers over 100 agencies, the US federal government is one of the largest employers in the country. Employee turnover has been an issue since the early days of the government (White 1948). While a loss of employees can have positive effect on an organization, negative consequences, including loss of human and knowledge capital, morale, and productivity, and increased costs for replacements, can be problematic for governance (Bertelli and Lewis 2012; Kim and Fernandez 2017). Research conducted by the US Senate, the National Commission on Public Service, the Society for Human Resource Management, and the Office of Personnel Management found that the rate of turnover in the federal government was higher than in other industries. This article reviews the scholarly literature on various definitions of turnover, as well as theories, causes, and consequences. While the focus of the article is on turnover in the federal government, general turnover is vital to this discussion.
The first section will review definitions and types of turnover. The next section will review theories and models used to explain turnover. The third section will discuss many determinants and consequences of turnover. The final section will discuss the impact of turnover on the federal government and future trends.
Researchers have been unable to agree on one definition of employee turnover. Definitions range from “movement across the membership boundary of an organization” (Price 1997, p. 532) to the withdrawal, leaving, or physical separation from an organization or the labor force (Mobley 1982; Mobley et al. 1978, 1979). Turnover applies to quits, transfers, layoffs, promotions, deaths, and retirement (Becker et al. 1977; Borjas and Rosen 1980; Borjas 1982). Bluedorn (1978) and Allen (2008) referred to two types of turnover: involuntary, initiated by the organization, and voluntary, initiated by the employee. Turnover may not be leaving an organization, but a change in the relationship with the organization, specifically separations, moving out of the organization, and accession, moving within the organization (Bluedorn 1978; Kirschenbaum and Weisberg 2002).
Intention to leave, or turnover intention, is the probability of a purposeful intent to leave, not necessarily an actual turnover. This is a conscious decision and the last step in the cognitive process of withdrawing from the organization (Cho et al. 2009). The intention to stay is the cognitive decision to remain (Tett and Meyer 1993).
Herzberg’s Two-Factor Theory of Satisfaction and Motivation: proposes that certain factors, defined as motivators (recognition, achievement, responsibility, job advancement, and job growth), are effective in motivating employee performance, leading to job satisfaction, commitment to the organization, and less intent to turnover. Hygiene factors, such as company policies, pay plans, and worker conditions, foster dissatisfaction in employees and are more likely to lead to turnover.
Vroom’s Expectancy Theory: assumes that employee behavior and performance result from conscious choices, beliefs, values, and attitudes. Individuals who are satisfied with their job are more likely to remain, as long as the rewards (pay, etc.) satisfy their wants and needs.
Models of Intrinsic and Extrinsic Work Motivation: hypothesizes that performance leads to either intrinsic (feelings of accomplishment, achievement, personal growth, and skill enhancement) or extrinsic (pay raises, promotion, status, and security) rewards, which will determine job satisfaction and intent to turnover.
Kahn’s Theory of Engagement: states that when an employee is engaged in and derived meaning, usefulness, and value from their work, they are less likely to leave the organization.
Social Exchange Theory: presumes that employees feel a sense of obligation to employers who are supportive, addressing their social and financial needs. In exchange for this support, employees feel obligated to perform effectively, a sense of organizational commitment, and less desire to leave.
Working for the Federal Government
Before determining why employees leave, it is necessary to understand why they choose to work for the federal government. According to Lewis and Frank (2002), “preferences for government or business jobs reflect not only their own job priorities, but their perceptions of which sector will better satisfy their needs” (p. 396). It is assumed that people who place a priority on pay generally choose private sector positions, whereas those who prioritize job security and public service motivation choose government jobs. This leads to the conclusion that the better educated, minorities, veterans, older workers, and those with public sector contacts are more likely to prefer public sector jobs.
There has been some discussion regarding the wages and pensions of federal workers. Ippolito (1987) argued that low turnover rates in the federal government meant that wages were too high. However, the low turnover rates may be because early retirement leads to the loss of pension. Federal employees may choose to delay retirement due to anticipated pension wealth.
Another issue is the differences between private sector and federal government pension funding. Private sector employers are not required to provide pension plans, but for those that do, standards set by Employer Retirement Income Security Act of 1974 must be followed. One standard is employer prefund pension obligations that protect “employees who have earned the right to receive a pension, even if the firm goes out of business” (Issacs 2015, p. 2). While it is unlikely that the federal government will go out of business, the Federal Employment Retirement System (FERS) requires all pensions be fully prefunded, ensuring recognition of the costs in the agency budgets.
The federal salary is 10–20% over similar private sector salaries.
New hires (1st year) in the federal government received salaries 8% higher than similar jobs in the private sector.
Federal workers receive benefits equivalent to 36% of their salaries; benefits in the private sector equal 40%.
Federal employees average 41 days of paid leave, compared to 32 in the private sector.
Job security in the federal government is equivalent to an extra 29% of pay or 11% of compensation.
Federal employees, on average, earned approximately 3% more than comparable private sector employees did.
Benefits for federal workers cost approximately $26 per hour worked, compared to $18 for private sector employees.
“Federal civilian workers whose highest level of education was a bachelor’s degree earned 5 percent more, on average, in the federal government than in the private sector.”
“Federal civil workers with no more than a high school education earned 34 percent more, on average, than similar workers in the private sector.”
“Federal workers with a professional degree or doctorate earned 24 percent less, on average, that their private-sector counterparts.”
“Average benefits were 52 percent higher for federal employees whose highest level of education was a bachelor’s degree than for similar private-sector employees.”
“Average benefits were 93 percent higher for federal employees with no more than a high school education than for their private-sector counterparts.”
“Among employees with a doctorate or professional degree average benefits were about the same in the two sectors.”
“Among workers whose education culminated in a bachelor’s degree, the cost of total compensation averaged 21 percent more for federal workers than for similar workers in the private sector.”
“Among workers with a high school diploma or less education, total compensation costs averaged 53 percent more for federal employees.”
“Total compensation costs among workers with a professional degree or doctorate were 18 percent lower for federal employees” (Falk 2012, pp. 2–3).
There has been a great deal of research on the causes of employee turnover in the public and private sectors, and for the most part, there is a lot of similarity. Ting (1997) proposed that “the job satisfaction of federal employees is determined by three sets of variables: job characteristics (i.e., pay satisfaction, career growth, task clarity, and significance), organizational characteristics (i.e., organizational commitment, relationship with coworkers and supervisors), and individual characteristics (i.e., public spirit, age, education, race and sex)” (p. 313). Pitts et al. (2011) concurred, dividing the factors into three categories: demographic, workplace satisfaction, and organizational factors.
Demographic factors are frequently studied in terms of turnover in the public and private sectors. Research has found that the older a person, particularly women, the less chance of turnover. Family size and responsibility have a greater turnover impact on women than on men. Tenure research has had conflicting results, as well as research on personality characteristics.
Generational differences and turnover have been studied. The 2017 Federal Employee Viewpoint Survey defines the four generations currently working for the federal government: 1% are Traditionalists, born 1945 or earlier; 43% are Baby Boomers, born between 1946 and 1964; 42% are Generation X, born between 1965 and 1980; and 14% are Generation Y, born 1981 or later (Management 2017c). In 2018, the youngest Traditionalists will be 73 years old, and the youngest Baby Boomers will be 54; babies born in the new millennium are turning 18 and entering the workforce. Different generations working together lead to age and value issues, resulting in workplace tension and stress, which can lead to turnover (Derrick and Walker 2006). As the values (job security, importance of family, and leisure time) of the generations differ, turnover will result in the loss of knowledge and talent from the older generations and the loss of new ideas and innovation from the younger generations.
Research on workplace factors or job characteristics is common. The theory is that the job satisfaction, regardless of personal factors, is significantly affected by job characteristics. If an employee is satisfied with their job, leaving is less likely to be considered. Person-Organization Fit (P-O Fit) is defined as the compatibility between the individual and the organization. Kristof (1996) illustrates P-O Fit as the relationship of the basic traits between the organization and the individual. A high level of P-O Fit is negatively related to intention to quit; lower levels are predictive of intention to leave.
Organizational characteristics, or relational factors, including public management reform, incentive structures (i.e., performance-based rewards), management techniques (i.e., performance-supporting supervision), employee empowerment, relationships with management and coworkers, person-organization fit, and justice climate have been researched from the human relations perspective. This perspective hypothesizes that the environment of the organization plays a role in job attitude, leading to job satisfaction and then to turnover or intent to turnover.
Attitudinal factors, such as stress, job satisfaction, and commitment to the organization, influence turnover. Research has examined the influence of commitment on work behavior, turnover intention, and turnover. Organizational commitment “can be characterized by three factors: (a) a strong belief in and acceptance of the organization’s goals and values; (b) a willingness to exert considerable effort on behalf of the organization; and (c) a strong desire to maintain a membership in the organization” (Mowday et al. 1982, p. 27). Commitment and support decrease intention to leave.
One factor that separates turnover in the private sector from turnover in the public sector is public service motivation (PSM). Perry (1996) defined PSM as “an individual’s predisposition to respond to motive grounded primarily or uniquely in public institutions” (p. 368). This means that an individual who works in the public sector is likely to be intrinsically or altruistically motivated by the idea of public service due to public morality or spirit, a desire to serve the public interest, loyalty to duty, or social equity (Perry and Wise 1990). Scholars have found that not only is PSM associated with public employees’ work preferences but that those with high levels of PSM are less interested in financial opportunities and more interested in satisfying intrinsic or higher-level needs (Bright 2009, 2011). Naff and Crum (1999) proved that there is a statistical significance between PSM and job satisfaction in the federal government.
What are the consequences of turnover and why is it so important in the federal government?
In the private sector, replacement costs can run from 50% to 200% of one employee’s annual salary, depending on rank, rate, seniority, specialization, performance level, and training (Partnership for Public Service and Booz Allen Hamilton 2010). According to Cascio (1991), the cost of turnover is equal to separation costs plus replacement costs plus training costs (p. 23); however, this does not include the costs of lost productivity, employee morale, administration costs, loss of talent and knowledge, and governance (Bertelli and Lewis 2012), which cannot be fixed with a dollar amount.
Reducing turnover can have negative consequences. While this may occur due to a lack of growth or opportunity in an organization, for an individual the result may be a positive upward career move. There may be increased earnings, career advancement, better person-organization fit, as well as use of skills, and increased self-development and esteem (Mobley 1982; Dalton and Todor 1979). In the long term, this may be economically beneficial as it “reduces inequitable distribution of income, contributes to the long-term growth rate of the economy, and reduces market “stickiness” (Dalton and Todor 1979, p. 229).
Not all consequences of turnover are dysfunctional, negative, or undesirable to the organization. For example, it can increase the effectiveness of the organization by allowing new blood and ideas, as well as balance the cost of turnover with the cost of retention. In some instances, it costs more to retain an employee who is a poor performer than to have that employee separate from the organization, either voluntarily or involuntarily. On the other hand, it may cost more to lose highly trained employees (Abelson and Baysinger 1984) than to lose a poor performer.
Raw data from OPM on turnover numbers show that 130,344 people quit, retired (RIF), were terminated or removed, or died from federal service between January 1 and September 30, 2017. Approximately 38% quit, 32% retired, and 2% died. Regardless, quit, retirement, and death accounted for 72% of the federal turnover rate for the first 9 months of 2017.
The Department of Veterans Affairs had the greatest number of separations in 2017. The cause for these high numbers is unknown; however, since 2009, the VA has experienced incidents of employee misconduct. Medical issues include exposure to HIV and hepatitis B and C at a dental clinic in Wisconsin; outbreaks of Legionnaire’s disease in 2011, 2012, and 2014 at facilities in Pennsylvania; and exposure to infectious diseases during dental procedures in St. Louis. Furthermore, a scheduling scandal was uncovered in 2014 in which employees were manipulating appointments and wait times. An audit revealed that between 2004 and 2014, thousands of veterans were either never seen by a doctor or never scheduled for appointments, and more than a thousand had died due to lack of medical care or malpractice (CNN.com). By November 2014, 5600 employees had been disciplined. This may have played a role in the high number of separated VA employees in 2017, even though the number of terminated employees is relatively low.
Federal News Radio reported that OMB is encouraging agencies to not just consider improving employee engagement but take action.
Bestplacestowork.org posted the Best Places to Work Agency Rankings for 2017. Using the question from the OPM Federal Employee Viewpoint Survey, rankings show that in large agencies (i.e., Cabinet-level agencies), NASA is ranked number 1, while the VA is ranked 17th out of 18, with DHS ranking 18th.
In January 2017, President Trump ordered federal agencies to cut staff immediately in order to shift funds to the military. However, between January 1 and September 30, 2017, federal civilian jobs only declined by 6000 (Lange 2017).
Finally, in early December 2017, NBC News reported that morale in the federal workforce is up this year; however, the State Department, the FBI, and other intelligence community organizations are experiencing lower morale. A decline in moral, or job dissatisfaction, could lead to turnover in these organizations.
Turnover can cost an organization financially in terms of recruiting, selecting, hiring, and training new employees, loss of productivity by the departing employee as well as other members of the organization, decrease of employee morale, loss of human capital, and loss of knowledge.
Research in the twenty-first century acknowledged that the federal government will experience retirement waves in the 2010s (Lewis and Cho 2011; Tobias 2011; Cho and Lewis 2011). Retirement-eligible employees and new hires are the most likely to leave the federal government. However, a loss of employees at either end of the workforce can affect the remaining employees. According to the GAO, these losses influence the number of “middle-level career bureaucrats to pass this institutional knowledge to new hires and organizational performance can suffer” (US Government Accountability Office 2009). The federal government would be wise to determine the necessary steps that would generate a greater retention rate with the younger workers.
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