Performance costs and benefits of collective turnover: A theory-driven measurement framework and applications

Building on job matching theory, we model the effect of collective turnover on workplace performance as the sum of its costs and possible benefits occurring through changes in workforce match quality. The resulting theoretical turnover-performance relationship is generally curvilinear, nesting all the hitherto known patterns -- linear, ``U-shape'' and ``inverted U-shape'' -- as special cases. We show how one can estimate this relationship empirically, for matched worker-plant data, and calculate the implied costs and benefits of turnover. Applications to data from two retail networks reveal that turnover is more costly than beneficial.

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