The "revolving door" theory refers to the ongoing turnover of employees in the business world. Employees are hired to perform certain tasks and, due to a variety of reasons, become dissatisfied and seek out jobs with other companies that have more appealing benefits. Sometimes, the individual simply wants more money, more appreciation, or a better working environment. In the political context, the "revolving door" refers to the practice of elected government employees leaving public service to work in the private sector, often causing a conflict of interest with their prior role.
With the sluggish economy of recent years, many employers do not feel the need to worry about the revolving door. When unemployment is high, dissatisfied employees are less likely to seek out a new job. With the economy improving, however, those employers who are not concerned will be adversely affected as employees seek more satisfying employment.
When an employee quits a job, turnover can cost a business 25% to 150% of the employee's salary. Companies can conduct a cost analysis to gain a better sense of the revolving door cost to their business. Turnover costs come from four main areas: transition, lack of productivity, hiring the new employee, and training the new employee. Human resource advisers and management consultants have noted that many employers do not have an accurate understanding of the potential cost of turnover or of their contribution to this phenomenon.
Transition expenses caused by the revolving door include exit interviews, pay separation, and benefit costs. The company also suffers from a lack of productivity until the job is filled and may need to divide responsibilities among other employees until someone is hired. This often causes other employees to become burnt out when too much work is expected of them. This can escalate the revolving door if these workers also seek more satisfying employment. To prevent this from occurring, employers can survey the workers' job satisfaction at least once per year, promote communication in order to improve employee circumstances, and ensure that employees are aware of the responsibilities expected from their positions.