Employment is terminated for three primary reasons comprising collective turnover: (1) attrition, (2) firings, and (3) layoffs. For all three reasons, turnover increases and performance often decreases. With attrition and firing, employees often need to be replaced, and sometimes layoffs of one type of work result in increased workers in other jobs. Again, calling for strategic HRM to manage turnover effectively.

Attrition occurs when employees leave for other jobs, elect to stop working for a time, or retire. Employees lost through attrition often need to be replaced. Retirement is an ongoing issue that the HR staff needs to anticipate, and some companies are retaining employees by offering retirees part-time positions. Employees who leave voluntarily are often interviewed so that managers can find out their reasons for leaving. The exit interview, usually conducted by someone from the HR department, can help identify problem areas that lead to turnover and can be used to help retain good employees.

Reasons for termination should be spelled out in the company’s HR employee manual based on avoiding wrongful discharge. Wrongful discharge is a legal doctrine that requires employers to have a job-related reason for terminating employees, including violation of rules and poor performance. Managers are sometimes hesitant to terminate employees who can’t do the job to standards, but retaining them is not fair to other employees, who often get stuck doing extra work and resent them—hurting group cohesiveness.

Layoffs usually occur because of poor economic conditions, organizational problems, or mergers and acquisitions. Downsizing, although a popular practice in the U.S. corporate world, has been called one of the most ineffective and expensive methods of reducing a workforce. It is usually the better employees who voluntarily leave for other jobs.