The Economic Impact of Employee Behaviors on Organizational Performance

Consider a recent quote from the Wall Street Journal (July 14, 2003): “It’s no longer about what you own or build; success is hinged to the resources and talent you can access.” Unfortunately, recent statistics indicate that American workplaces are not doing a very good job of managing the talent they currently have. Thus Only 14 percent of American workers say they are very satisfied with their jobs. Twenty-five percent say they “are just showing up to collect a paycheck” (The Stat 2005). From January 2004, to January 2005, 24 percent of American workers voluntarily quit their jobs, a 13 percent rise since the previous year. That figure varies widely by industry, though, with relatively low rates in manufacturing and transportation (roughly 15 percent), and relatively high rates in leisure and hospitality, retail, and construction industries (ranging from about 25–45 percent) (Employment Policy Foundation 2005). To appreciate what that means for an individual firm, consider the number of people Wal-Mart employed at the end of 2004—1,600,000 people (Fortune 500, 2005). Its annual employee turnover rate is 44 percent—close to the retail industry average (Frontline 2005). Each year, therefore, Wal-Mart must recruit, hire, and train more than 700,000 new employees just to replace those who left. Women now outnumber men in managerial and professional jobs, yet many leave even blue-chip employers because they do not feel valued, their companies do not offer flexible-employment policies, or their work is not intellectually challenging. Rather than leave the workforce, most resurface at companies that offer more progressive policies (Deutsch 2005).