Is High Employee Turnover Really Harmful? An Empirical Test Using Company Records

Abstract

We tested the hypothesis that employee turnover and firm performance have an inverted U-shaped relationship: overly high or low turnover is harmful. Our analysis was based on economic performance data from 110 offices of a temporary employment agency. These offices had high variation in turnover but were otherwise similar, allowing control for important intervening variables. Regression analysis revealed a curvilinear relationship; high turnover was harmful, but the inverted U-shape was not observed with certainty.