Labour Turnover and Labour Productivity in a Retail Organization
William Siebert (),
Nick Zubanov (),
Arnaud Chevalier and
No 2322, IZA Discussion Papers from Institute of Labor Economics (IZA)
We study the impact of labour turnover on labour productivity using a panel dataset of 347 shops belonging to a large UK clothing retailer over1995-1999. For the within-shop link – holding constant the shop’s permanent characteristics – we observe an inverted U-shape effect of labour turnover on productivity. The productivity-maximizing rates of FTE-adjusted quits and hires are each about 20% per year, improving productivity by 2.5% compared to the zero turnover level. We explain the difference between this optimal level of labour turnover and its observed average (quits and hires each around 10%) through the costs of hiring estimated at about £600 per hire. By contrast, between shops, there is a positive link between average rates of turnover and average productivity, suggesting that an unobservable management quality factor generates both high turnover and productivity, which we discuss.
Keywords: matched employee-firm panel data; retailing; labour turnover; labour productivity (search for similar items in EconPapers)
JEL-codes: J63 J24 L81 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-bec, nep-eff, nep-hrm and nep-lab
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Published in: Academy of Management Journal, 2009, 52 (2), 294-313
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Persistent link: https://EconPapers.repec.org/RePEc:iza:izadps:dp2322
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