Seminar paper from the year 2019 in the subject Business economics – Operations Research, grade: 1.0, Jacobs University Bremen g Gmb H, language: English, abstract: Employees are a company’s greatest asset and competitive advantage. However, the consulting industry, represented by its flagship companies PWC, EY, KPMG and Deloitte, is facing a major turnover problem during recent years with annual rates between 15 and 20 per cent. This paper investigates two of the major causes for this development; the ‘Meatgrinder Problem’ and the ‘Kickstart Problem’, which form a vicious cycle. Therefore, it is necessary to evaluate whether the industries’ current employee retention mechanisms are sufficient to break the cycle of the two interacting causes for turnover.
Summing up the main components associated with the cost of turnover, the Saratoga Institute estimates the average cost of turnover to one time the annual salary of a worker. However, not all kinds of turnover are necessarily detrimental. According to Abelson & Baysinger (1984), some degree of turnover can have positive consequences for organizations like better person-job matches and staffing flexibility. On the other hand, dysfunctional turnover is the voluntary separation of employees whom the organization prefers to retain since these employees have made positive contributions to the organization and, by leaving, detract from overall effectiveness.
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