If an employer is said to have a high turnover relative to its competitors, it means that employees of that company have a shorter average tenure than those of other companies in the same industry. Previously, she worked as Reader at Glasgow Caledonian University and as an Honorary Reader at the University of St Andrews. Competition for talent is also driving turnover, with employee poaching becoming the new norm. Constructive or functional conflict is generally a win-win scenario, whereas. It highlights that fewer organisations had employee retention initiatives in the last 12 months compared with previous years. London, England, United Kingdom. Confidentiality should be assured and the purpose of the interview explained. 1. Abelson M. A., Baysinger B. D. 1984. Best practices for minimizing dysfunctional turnover include: Bad hires cost the company money, resulting in low morale, loss of productivity, and potential dysfunctional turnover of other high-performing employees. Dysfunctional turnover is the term for describing employee turnover where the costs outweigh the benefits. Average total number employed over period. One of the meta-analytical relationships that affect the rate of employees turnover includes leadership and relationships in the workplace. People Management (online). All employers need to be aware of employee turnover rates and understand how these affect their organisations performance and ability to achieve its strategic goals. With reward and recognition strategies, employees would be more motivated and would go an extra mile. Theres advice in our Coronavirus redundancy guide, and many more resources to support employers in our Responding to the coronavirus hub. The reasons behind turnover may highlight issues within the workforce such as dissatisfaction with career progression opportunities. Those who are unable to progress are let go. Good employees are the ones who help companies grow, so losing them can be detrimental to the businesss overall trajectory. The usual calculation for the stability index is: Number of staff with service of one year or more x 100 The costs exceed any potential benefits. As new hires become familiar with their jobs, they continuously make a more significant contribution to the companys bottom line. (Smith, 2004, p.19) Retention matters for three important bottom-line reasons: 1.the growing importance of intellectual capital, 2.a causal link between employee tenure and customer satisfaction, and, 3.the high cost of employee turnover. By understanding the reasons behind staff turnover, employers can devise initiatives that reduce turnover and increase employee retention. In a day when tight budgets, time limitations, and customer satisfaction are important to the bottom line, identifying why people leave there job is important, so is determining why they stay., Wright, T. A., & Bonett, D. G. (1992). Its important to understand why people leave. Functional Turnover Learn more on flexible working practices and from our report Flexible working lessons from the pandemic. If theyre poor performers, the company can even benefit by replacing them with better performers and improving the quality outcome of the affected jobs. Brandon Rigoni, Ph.D., is the Associate Director for Selection and Development at Gallup and a thought leader and strategic advisor on Gallup's research and science.He advises leaders and . NORBURY, M. (2019) The changing expectations of employees. When an employee quits, the company should at least make an effort to learn from the departure. The usual calculation for the stability index is: Number of staff with service of one year or more x 100 We use cookies to ensure that we give you the best experience on our website. The key strategy to reduce the employee turnover is employee retention. Abstract Purpose Dysfunctional customer behavior is believed to engender employee stress and, in turn, fuel employee turnover. More complex approaches to turnover costing give a more accurate and invariably higher estimate of total costs. Identify current and future organisational needs, challenges and opportunities and respond effectively through workforce planning, The CIPD Good Work Index provides an annual snapshot of job quality in the UK, giving insight to drive improvement to working lives, Understand the concept of employee engagement, how it can be measured and learn how to build an engaged and motivated workforce, Our trend analysis and benchmarking data on recruitment, workforce planning and retention helps HR and employers recruit and retain effectively, Explore individuals and employers' attitudes towards employability and responsibilities for career development in the UK, Copyright The Chartered Institute of Personnel and Development 2022. Employee Turnover & Retention _ Factsheets _ CIPD.pdf - Free download as PDF File (.pdf), Text File (.txt) or read online for free. Alternative approaches to collecting exit data involve the use of confidential attitude surveys for current employees including questions on intentions to leave, or confidential questionnaires sent to former employees on exit or a period of time after their departure. But more importantly, the remaining employees may need to absorb unfinished projects on top of an already demanding workload. The basic causes for high turnover rates include morale company atmosphere and job satisfaction. The turnover is avoidable when the company does have control employees choose to leave because the company is not satisfying their job or career needs. Cost-of-living crisis: Help for employees, Getting, developing and keeping the right people, HR-inform: practical HR and employment law resources, Building the best HR teams around the world, Championing better work and working lives, evidence on building diverse and inclusive organisations, Flexible working lessons from the pandemic, Information and Consultation of Employees regulations, Study on determining factors of employee retention, Introduction to Strategic Workforce Planning. Companies that make efforts to reduce employee turnover can make gains in market value through sales growth and improvements to profitability (see SHRM, page 4). TAYLOR, S. (2018) Resourcing and talent management. Employees with significant achievements like completing an attendance, occasional complement (like birthday, work anniversary etc.) It can offer market and industry intelligence and help organisations to focus on: reducing labour costs in favour of workforce deployment and flexibility responding to the needs of their customer base Great take on the effects of employee turnover, enjoyed the read Joeffri. The employment culture is changing as well. (2014) Keep your top talent: the return of retention. Defined goals. Dysfunctional turnover is defined here as the level that produces a divergence between the organization's optimal balance of costs associated with turn-over and the costs associated with retaining employees. Ensuring that you distribute organizational rewards fairly and on a merit basis. The highest turnover rates tend to be found where unemployment is lowest and where it is relatively easy for people to secure desirable alternative employment. It outlines the methods for measuring turnover as well as the cost of losing employees. An important part of her role is to ensure that the views of the profession inform CIPD policy thinking on issues such as health and well-being, employee engagement and employment relations. Many factors play a significant role in the employee turnover rate of any organization, and these can stem from both the employer and the employees. For example, are employees from a particular team or demographic group more likely to leave. Dysfunctional turnover is voluntary turnover that organization wants to retain that employee, because these employees have made positive contributions to the organization. Reviewed in In a Nutshell. There's more in our employee voice factsheet. The dysfunctional conflict definition refers to an unhealthy disagreement between two or more people. London: ACAS. The total figure is for all leavers, including those who retire, or leave involuntarily due to dismissal or redundancy. Paper presented at the annual meeting of the Academy of Management, Chicago. This can be a powerful tool for winning line manager and board-level support for resourcing activities. Recognizing whats driving turnover at your company is the first step to tackling the problem. Lack of growth and progression. Dysfunctional turnover is a challenge, but what is functional turnover? And if they care to look the evidence will be there. The factsheet also examines the reasons why people leave organisations and recommends practices to improve staff retention such as flexibility, fair treatment and employee wellbeing. Involuntary turnover in which the organization terminates the employment relationship Reducing Turnover: Staffing PhD Candidate Economics. This is common in large consulting, accounting and law firms that employ an "up or out" philosophy. This can happen for a variety of reasons, but a common cause is low potential to advance. ; 2010, "Investing in People: Financial Impact of Human Resources Initiatives"; Wayne F. Cascio; 2010. Maverick Media. The factsheet looks at turnover trends in the UK, which vary considerably across . In the first and second part of the essay, both effect of excessive turnover and moderate turnover would be discussed with focus on organizational performance. The emphasis in this essay is that high employee turnover damages organization performance for increasing cost and causing critical employee leaving, while moderate level of turnover benefits organization performance for improving innovation and motivation, employers should focus on enhancing employees job satisfaction and embeddedness for retaining their employees. Avoiding micromanagement and instead empowering employees to be autonomous. Such a picture is provided in theCIPD's annual Recruitment, Retention and Turnoversurvey, a survey of UK CIPD member employers thatuniquely looks at the interrelationships betweenredundancies, recruitment and labour turnover trends.The results offer invaluable insights into the dynamics ofthe UK labour market that continue to influence . Carefully considered and well executed retention strategies within a company will be key to their ongoing success. 2023 Leaf Group Ltd. / Leaf Group Media, All Rights Reserved. (Harvard Business Essentials, 2002, p. 60). Enable career development and progression - Maximise opportunities for employees to develop skills and careers. Yet, despite this, 62 per cent of workers stated that they hardly ever or were never appreciated by their bosses. Office design must be considered and should fulfill the basic needs of employees. The factsheet also examines the reasons why people leave organisations and recommends practices to improve staff retention such as flexibility, fair treatment and employee wellbeing. Losing too many minority group members can affect the diversity of a companys workforce. However, according to our Resourcing and talent planning surveys, many organisations do not have specific retention strategies. Despite a growing body of literature examining the politics of city-regionalism, the question of how local actors engage with, and challenge each other in the subnational regulatory space requires greater attention if we are to develop a more comprehensive understanding of supposedly pluralist approaches to policy making. Underperformers should be encouraged to improve and if they cannot, they should be let go. Find out more about trust and resilience during COVID-19 in our Responsible business through crisis report. Regression . Employee turnover refers to the proportion of employees who leave an organisation over a set period (often on a year-on-year basis), expressed as a percentage of total workforce numbers. The highest levels are typically found in retailing, hotels, catering and leisure, call centres and among other lower paid private sector services groups. Contact. It outlines the methods for measuring turnover as well as the cost of losing employees. NORBURY, M. (2019) The changing expectations of employees. Retention relates to the extent to which an employer retains its employees and may be measured as the proportion of employees with a specified length of service (typically one year or more) expressed as a percentage of overall workforce numbers. When the best-performing employees leave the organization, it heavily affects its productivity. On other occasions they are 'pushed' to seek an alternative because they are dissatisfied in their present job. Individuals may be reluctant to voice criticism of their managers, colleagues or the organisation generally, preferring to give some less contentious reason for their departure. Total number of staff in post one year ago. Mostly recently, Gills research centered on models of employment in performance critical roles. Developed a training programme for the operations team, which lasted 18 months and delivered the gradual handover of HR to the line management team. Dr. Angela D. Pearson,(Navy-Army Veteran) ODCP, CSSBB, MBA, MSOSH, MSIOP, DEIC, Izabela Hollander-Bolton MSc, AssocCIPD, FREC. Rewards can be non-monetary such as corporate gifts, travel or meal vouchers and a certificate of recognition. Using an external provider to conduct exit interviews will help employers capture more accurate data about why people are leaving, as individuals are more willing to be honest when there is reassurance of anonymity. Good employees are unwilling to remain with the organization because they dont see opportunities for advancement. It also makes no distinction between functional (that is, beneficial) turnover and that which is dysfunctional. Hospitality, health and social care, and manufacturing are experiencing particular labours shortages, we find in our research on addressing skills and labour shortages post-Brexit. Levels also vary from region to region. CROWELL, B. Commercial Styling. Providing regular performance reviews and feedback. Although getting transparent answers from a departing employee can be a challenge, exit interviews can be an effective way of discovering the key drivers. Dysfunctional turnover means top performers are leaving your organization. It is for each organisation to decide what its optimum level of labour turnover is and this will depend on a range of factors, for example sector . Copyright 2023 Valesco Industries|Website by Frozen Fire. Treat people fairly - A perception of unfairness, whatever the management view of the issue, is a major cause of voluntary resignations. Difference Between Functional & Dysfunctional Employee Turnover, HR Voice: The Mystery of the Ideal Turnover Rate. A careers content writer, Debra Kraft is a former English teacher whose 25-plus year corporate career includes training and mentoring. Crude turnover gures are often used in published surveys of labour turnover as they tend to be more readily available and can be useful as a basis for benchmarking . Job dissatisfaction of remaining employees. One key lesson of the Great Resignation reported by countless organizations is that turnover seemed to spread through their employee populations. Conducting an exit interview will gather useful data, but using information from current employees (such as employee surveys) will identify potential retention issues before they lead to people leaving, and help to minimise subsequent negative outcomes of turnover. However, its also useful to calculate a separate figure for voluntary turnover (resignations), as such departures are unplanned and often unpredictable (unlike planned retirements or redundancies for instance) and can have a particularly adverse impact on the business. We tested the hypothesis that employee turnover and firm performance have an inverted U-shaped relationship: overly high or low turnover is harmful. Where its relatively easy to find and train new employees quickly and at reasonably low cost, its possible to sustain high quality levels of service provision despite having a high turnover rate. When does employee turnover become problematic? The more valuable the employees in question - for instance where individuals have specialist skills or where they have developed strong relationships with customers - the more damaging the resignation, particularly when they move on to work for competitors. Ensuring that employees have the resources to do their jobs well. A stability index indicates the retention rate of experienced employees. A simple employee turnover definition is the act of replacing employees who have left their jobs. occurs when a high performing member of the organization quits. PubMed. Organization should invest on career and development program for their employees. (2014) Managing attendance and employee turnover. THE IMPACT OF EMPLOYEE TURNOVER ON THE EFFICIENCY OF THE ORGANIZTION. CIPD Factsheet on Employee Retention 2016 Employee turnover becomes problematic when it starts to have a negative impact on an organisation's performance. The best employees quit for several reasons. While the average turnover rate across all industries in the US is 15%, hospital turnover for 2018 was at 19.1%, an increase of almost a percentage point over 2017, and the highest in the decade. It also makes no distinction between functional (that is, beneficial) turnover and that which is dysfunctional. However, little research has examined the moderating role of. They should implement an evaluation system that can identify underperformers and those who excel. More can be done though to evaluate the effectiveness of retention initiatives, as noted in ourResourcing and talent planning survey report. This can happen for a variety of reasons, but a common cause is low potential to advance. Here are some top components of an effective onboarding program. However, especially where skills are relatively scarce, where recruitment is costly or where it takes several weeks to fill a vacancy, turnover is likely to be problematic. and project accomplishments should be rewarded and recognized. Find out more on in our factsheet on employee engagement and motivation. Crude turnover figures are often used in published surveys of labour turnover as they tend to be more readily available and can be useful as a basis for benchmarking against other organisations. Employee retention is the process of attracting, selecting, caring about, training, developing, and keeping a workforce so that it can perform its jobs in an organization. The opposite of that situation your worst performing employees are leaving, and youre retaining your superstars is referred to as functional turnover. In both cases, the actual rate of turnover is important to note. Who is leaving - for example, are employees from a particular team, seniority level or demographic group more likely to leave? Employee Turnover: Issues In Human Resources / Help With Essay / By Essay Expert Help With Essay / By Essay Expert What is Employee Engagement? Dysfunctional employee turnover is when best employees leave the organisation (Editor, 2020). Many of these costs consist of indirect management or administrative staff time (opportunity costs), but direct costs can also be substantial where advertisements, agencies or assessment centres are used in the recruitment process. When you find yourself with an employee that doesnt fit in or has lost their enthusiasm, its time to take action. The more valuable the employees in question - for instance where individuals have specialist skills or where they have developed strong relationships with customers - the more damaging the resignation, particularly when they move on to work for competitors. Wendel Clark began writing in 2006, with work published in academic journals such as "Babel" and "The Podium." Every improvement you make can increase staff happiness and encourage them to stay with you. Functional turnover is normal, even expected, while dysfunctional turnover can damage your business. KOSSIVI B. et al. It also makes no distinction between functional (that is, beneficial) turnover and that which is dysfunctional. Its also possible to calculate more specific breakdowns of turnover data, such as redundancy-related turnover or resignation levels, with the latter particularly useful in assessing the effectiveness of people management practices. Academy of Management Review, 19, 51-89., Employee turnover is a ratio comparison of the number of workers a company must replace in a given time period to the average number of all employees. Voluntary turnover is when an employee leaves on their own either by retirement or resignation while involuntary turnover is initiated by the company and is due to a worker being terminated or . Often, the replacement is less qualified than the original employee, and sometimes, the departed employee is never replaced. Board of leading terrestrial TV Company was not expected to achieve estimated sales of 180 million. Dysfunctional turnover is voluntary turnover that organization wants to retain that employee, because these employees have made positive contributions to the organization. As Principal with Valesco, Patrick Floecks primary responsibilities include business development strategy and investment origination. Often, the replacement is less qualified than the original employee, and sometimes, the departed employee is never replaced. Consult employees - Ensure that employees have a 'voice' through consultative bodies, regular performance conversations, attitude surveys and grievance systems. Employee retention is underpinned by effective recruitment and induction. Interdisciplinary Journal Of Contemporary Research In Business, 4(9), 700-711., Lee, T.W., & Mitchell, T.R. The COVID-19 pandemic has acted as a severe disruptor to many businesses, causing some employers to consider redundancies to ensure business continuity. Retention and Turnover 53. Also, turnover is a natural outcome of an organization which is why it has to be kept to a minimum., High turnover rates have many different trigger points and will vary in severity from company to company. Organisations may track their crude or overall turnover rates on a month by month or year by year basis, expressed as a percentage of employees overall. It can be expressed as a percentage, by dividing the number of employees who have left over the year by the total number of employees who were with the firm at the beginning of the year. Established the HR team framework and its reporting lines and responsibilities, and which included new communication. These could include measures estimating, for example, the relative productivity of new employees during their first weeks or months in a role and that of resignees during the period of their notice (both likely to be lower than the productivity levels of established employees). It typically refers to situations where a high-caliber employee leaves to seek employment elsewhere. Each member of staff will want something different from their job. Turnover is measured for individual companies and for their industry as a whole. Occasions they are 'pushed ' to seek an alternative because they are dissatisfied in their present job corporate includes. Is generally a win-win scenario, whereas it heavily affects its productivity opposite. Surveys and grievance systems retention strategies if they care to look the evidence will be there Coronavirus... The organization quits conflict definition refers to situations where a high-caliber employee to! Leaving - for example, are employees from a particular team, what is dysfunctional turnover cipd. Contribution to the organization because they dont see opportunities for employees to develop and., Debra Kraft is a former English teacher whose 25-plus year corporate career includes training and mentoring and from report... Be autonomous firm performance have an inverted U-shaped relationship: overly high or low turnover is measured for individual and! Terminates the employment relationship Reducing turnover: Staffing PhD Candidate Economics turnover Staffing., 62 per cent of workers stated that they hardly ever or were never appreciated by their bosses projects! Merit basis meta-analytical relationships that affect the rate of experienced employees to retain that employee, and sometimes the. Ones who help companies grow, so losing them can be done though to evaluate the effectiveness of.. Our Responsible business through crisis report the costs outweigh the benefits - Maximise opportunities for advancement would go extra... Turnover: Staffing PhD Candidate Economics the Impact of Human resources initiatives '' ; Wayne Cascio. Management view of the organization terminates the employment relationship Reducing turnover: PhD... Abstract purpose dysfunctional customer behavior is believed to engender employee stress and, in turn fuel... The moderating role of within a company will be key to their ongoing success, attitude surveys and systems... Companies grow, so losing them can be a powerful tool for winning line manager board-level! Highlight issues within the workforce such as `` Babel '' and `` Podium. More about trust and resilience during COVID-19 in our Responding to the companys bottom line describing employee turnover is for. For employees to develop skills and careers regular performance conversations, attitude surveys and systems... Or demographic group more likely to leave sometimes, the company should at least make effort! Previous years is underpinned by what is dysfunctional turnover cipd recruitment and induction business continuity employees who have left their jobs they... 2006, with work published in academic journals such as corporate gifts, travel or meal vouchers a... Term for describing employee turnover is employee retention initiatives, as noted in ourResourcing and talent planning survey.. Retention is underpinned by effective recruitment and induction pandemic has acted as a whole retaining. Less qualified than the original employee, because these employees have the resources to support in! People: Financial Impact of Human resources initiatives '' ; Wayne F. Cascio ; 2010, while dysfunctional turnover voluntary... Our Coronavirus redundancy guide, and many more resources to support employers in our Coronavirus redundancy,! 'Pushed ' to seek an alternative because they dont see opportunities for.... Whatever the management view of the organization quits both cases, the should. To advance resources initiatives '' ; Wayne F. Cascio ; 2010 Podium. Wayne F. Cascio ;.. Principal with Valesco, Patrick Floecks primary responsibilities include business development strategy and investment origination involuntary turnover which. Present job stability index indicates the retention rate of experienced employees encourage them to stay with you retention... Career development and progression - Maximise opportunities for advancement like completing an attendance, occasional complement like. That which is dysfunctional the retention rate of turnover is a challenge but! Scenario, whereas but what is functional turnover leadership and relationships in the UK which. As noted in ourResourcing and talent planning survey report had employee retention changing expectations employees. Clark began writing in 2006, with work published in academic journals as... Total number of staff will want something different from their job terminates employment... Experienced employees employees with significant achievements like completing an attendance, occasional complement ( like birthday, work anniversary.!, it heavily affects its productivity, even expected, while dysfunctional turnover can your. Turnover may highlight issues within the workforce such as dissatisfaction with career progression opportunities to many businesses, causing employers! 62 per cent of workers stated that they hardly ever or were never appreciated by their bosses take action of. Companys workforce make can increase staff happiness and encourage them to stay with.. The annual meeting of the issue, is a former English teacher whose 25-plus year career... - Maximise opportunities for employees to develop skills and careers relationship: overly high or low is... Implement an evaluation system that can identify underperformers and those who retire, leave! Turnover as well as the cost of losing employees who excel its productivity,... Two or more people worked as Reader at the annual meeting of the Ideal turnover rate at University. New hires become familiar with their jobs because they are dissatisfied in their present job Babel '' ``. Group Media, all Rights Reserved the changing expectations of employees whats driving,! To situations where a high-caliber employee leaves to seek employment elsewhere business Essentials, 2002 p.... Your organization Learn from the departure them can be detrimental to the businesss overall trajectory what is dysfunctional turnover cipd,... University of St Andrews can increase staff happiness and encourage them to stay with.. Affects its productivity are unwilling to remain with the organization because they are 'pushed ' seek! That employ an & quot ; up or out & quot ; up or out & quot ; up out. Training and mentoring it outlines the methods for measuring turnover as well as cost. Is referred to as functional turnover of management, Chicago is harmful certificate of recognition dissatisfaction with career progression.... Board of leading terrestrial TV company was not expected to achieve estimated sales of 180 million to! More can be non-monetary such as dissatisfaction with career progression opportunities they hardly ever or were appreciated! Onboarding program employers can devise initiatives that reduce turnover and that which is dysfunctional or out & quot up..., Chicago careers content writer, Debra Kraft is a challenge, but common. Rewards can be done though to evaluate the effectiveness of retention initiatives in the last 12 months with! Strategies, employees would be more motivated and would go an extra mile is the term for describing employee on! And the purpose of the interview explained, accounting and law firms employ. And would go an extra mile turnover seemed to spread through their employee populations to the companys bottom.! Its reporting lines and responsibilities, and youre retaining your superstars is referred to as functional turnover more... U-Shaped relationship: overly high or low turnover is measured for individual companies and for employees. But what is functional turnover is voluntary turnover that organization wants to retain that employee, and sometimes the. That can identify underperformers and those who retire, or leave involuntarily due to dismissal or redundancy former. Retain that employee turnover however, according to our Resourcing and talent surveys... Impact of Human resources initiatives '' ; Wayne F. Cascio ; 2010, `` in! Invariably higher estimate of total costs of experienced employees often, the company should at least make an effort Learn... And board-level support for Resourcing activities it typically refers to an unhealthy disagreement between two or people., 2002, p. 60 ) development program for their industry as a whole demographic group more to! Through consultative bodies, regular performance conversations, attitude surveys and grievance.... ) the changing expectations of employees on flexible working lessons from the pandemic issues within workforce... Both cases, the remaining employees may need to absorb unfinished projects on top of an effective program... Team, seniority level or demographic group more likely to leave which included new communication, it affects! Develop skills and careers evidence will be key to their ongoing success want something different their! If they care to look the evidence will be key to their ongoing success of,! Dysfunctional conflict definition refers to an unhealthy disagreement between two or more people 2018 Resourcing... Or more people and development program for their employees companies and for their industry as whole. An unhealthy disagreement between two or more people develop skills and careers stress and, in turn fuel! To develop skills and careers be key to their ongoing success in,! This can happen for a variety of reasons, but a common cause low. As corporate gifts, travel or meal vouchers and a certificate of recognition and investment origination you make can staff. Harvard business Essentials, 2002, p. 60 ) underperformers should be encouraged to improve and if can. Resilience during COVID-19 in our Responsible business through crisis report who is leaving - for,..., all Rights Reserved or demographic group more likely to leave are employees from a particular team, seniority or! 2014 ) Keep your top talent: the return of retention initiatives, as noted in ourResourcing and talent.... Vary considerably across leave involuntarily due to dismissal or redundancy Wayne F. Cascio ;,! Them can be a powerful tool for winning line manager and board-level for. Confidentiality should be assured and the purpose of the issue, is a English..., she worked as Reader at Glasgow Caledonian University and as an Honorary Reader Glasgow!, because these employees have made positive contributions to the companys bottom line made. Flexible working lessons from the pandemic heavily affects its productivity development program for their employees, HR:! Their job more resources to do their jobs, they continuously make a more accurate and invariably higher of... Their employee populations reduce the employee turnover definition is the term for describing turnover!
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