Absorbing the Costs of Turnover
Bo H. Eriksen
University of Southern Denmark
January 16, 2012
This study looks at the relationship between labor productivity and employee turnover. I show that the average firm suffers a productivity loss of about 10 percent from employee turnover. Since strategies for increasing employee retention may be economically infeasible, organizational characteristics that affect turnover costs are important. I argue that slack resources may absorb productivity losses. This only appears to be the case for firms experiencing high turnover rates.
Number of Pages in PDF File: 24
Keywords: Employee turnover, strategic human capital, labor productivity, slack resources, panel data
JEL Classification: M10, M12, M51, J6, D24working papers series
Date posted: May 13, 2010 ; Last revised: January 16, 2012
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