A Structural Estimation Approach to Agent Attrition

44 Pages Posted: 14 Jun 2018

See all articles by Seyed Morteza Emadi

Seyed Morteza Emadi

University of North Carolina (UNC) at Chapel Hill - Kenan-Flagler Business School

Bradley R. Staats

University of North Carolina Kenan-Flagler Business School

Date Written: May 10, 2018

Abstract

Worker attrition is a costly and operationally disruptive challenge throughout the world. Although large bodies of research have documented drivers of attrition and its operational consequences, managers still lack an integrated approach to understanding attrition and making decisions to address it on a forward-going basis. To fill this need, we build a structural model that captures both the firm's decision to terminate a workers' employment (involuntary attrition) and uses an optimal stopping problem process to model a workers' decision to leave the firm (voluntary attrition). We then estimate the parameters of the model and conduct counterfactual analyses on the population of 1,135 agents serving one client over four years for an Indian business process management (BPM) company. Our model reveals a number of interesting findings as we see that agents' voluntary attrition decisions are relatively insensitive to salary. We also find that supervisors have a strong impact on whether employees stay as they reshape the way that agents make their decisions. If all employees were managed by the best supervisor in our data then voluntary attrition would reduce by over 40%. Altogether our paper contributes to the burgeoning literature on people operations, as well as to managerial practice.

Keywords: Attrition, Empirical Operations, People Operations, Structural Estimation

Suggested Citation

Emadi, Seyed Morteza and Staats, Bradley R., A Structural Estimation Approach to Agent Attrition (May 10, 2018). Available at SSRN: https://ssrn.com/abstract=3180225 or http://dx.doi.org/10.2139/ssrn.3180225

Seyed Morteza Emadi (Contact Author)

University of North Carolina (UNC) at Chapel Hill - Kenan-Flagler Business School

McColl Building
Chapel Hill, NC 27599-3490
United States

Bradley R. Staats

University of North Carolina Kenan-Flagler Business School ( email )

McColl Building, CB#3490
Chapel Hill, NC 27599
United States

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