Vishakha Gupta, University of Puget Sound
Full manuscript: www.kon.org/urc/v12/gupta.html
Abstract This literature review analyzed studies on Person Organization (P-O) fit and outcome variables (satisfaction, commitment, and turnover) conducted in the past 12 years. The aim of this study was to answer questions regarding the relationship of P-O fit with satisfaction, commitment and turnover. PsychInfo and PsychArticle were used to locate studies in the past 12 years that included P-O fit and at least one outcome variable (satisfaction, commitment, or turnover). Results show that P-O fit does predict satisfaction, commitment, and turnover.
Introduction Organizations today face a competitive global environment: the economy is now recovering from the worst recession since the Great Depression. As such it is vital for companies to cut costs where possible. One major expense for organizations is the cost of labor. In many companies, including the Fortune 500 companies, the total cost of the workforce averages 70 percent of operating expenses (Human Capital Institute). Hence, one way to cut costs is by reducing employee turnover (Silverthorne, 2004) and thus reducing the overhead costs of having to constantly hire and train new employees.
Much research has looked at the cost of turnover to companies; the Society for Human Resource Management estimated that it cost $3,500 to replace one $8.00/hour employee when all costs such as recruiting, hiring, and training were considered. One may argue that companies ought to simply lay off workers instead of improving retention rates to cut costs. However, this is not a viable solution in the short or long term. In the short term, cutting off too many employees results in the remaining employees taking on additional work and may require that some employees go through additional training, which is an added expense. In the long term, cutting too many people could cause issues when business picks up again. The company may then need to replace the laid off workers, and this would eventually result in additional recruiting costs (Human Capital Institute, n.d.), not to mention the numerous other costs related to training new hires. Losing experienced workers who have gained skills through various situations over time could take years to replace.
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