Working Paper: NBER ID: w26179
Authors: Peter J. Kuhn; Lizi Yu
Abstract: We estimate turnover costs in small retail sales teams using daily sales data and an advance notice requirement to address endogeneity concerns. In addition to short-staffing and onboarding costs, we identify two less familiar sources of turnover costs: incumbent workers’ recruitment activities, and reductions in team morale after a departure is announced. Our estimates of total turnover costs are relatively modest, however: Ten percent higher turnover is about as costly as a 0.6% wage increase. We attribute these low costs to a set of complementary personnel policies which ensure that only 25 percent of departures result in a short-staffing spell.
Keywords: turnover costs; retail; productivity; employee recruitment; team dynamics
JEL Codes: J31; J63; J64
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| employee turnover (J63) | shortstaffing (J22) |
| employee turnover (J63) | onboarding costs (J32) |
| employee turnover (J63) | reductions in team morale (M54) |
| shortstaffing (J22) | productivity losses (J17) |
| employee turnover (J63) | recruiting activities (M51) |
| employee turnover (J63) | productivity losses before departure (J22) |
| 10% increase in turnover (O39) | 0.6% increase in wages (J31) |
| employee turnover (J63) | productivity losses (J17) |