Abstract: Identifying the causal effects of turnover on organizational productivity is challenging, due to data constraints and endogeneity issues. We address these challenges by using day-to-day variation in the composition and performance of small retail sales teams, and by exploiting an advance notice requirement for quits. We find robust and statistically significant productivity losses at four distinct times during the departure process: after the worker gives notice, before she departs, after she leaves, and after a new worker starts. We attribute the first two effects to a combination of recruitment activities by incumbent workers and reductions in morale, and the last two to short-staffing and on-boarding costs. Almost two thirds (63 percent) of these productivity losses occur before the departing worker leaves, and only 24 percent result from operating with an unfilled vacancy. Overall, we estimate that the costs of a ten percent increase in turnover are equivalent to a 0.6 percent wage increase; wage hikes will therefore pay for themselves (in turnover cost savings) only if the elasticity of quits to wages exceeds 16.8 in absolute value.

(NBER Working Paper No. 26179) with Peter Kuhn, Revise & Resubmit at Journal of Labor Economics

Kinks as Goals: Accelerating Commissions and the Performance of Sales Teams

with Peter Kuhn


Media Coverage: Human Resource Executive

Abstract: In this paper, I examine the responses of lawyers’ promotions, performance, and turnover to changes in the gender mix of their bosses and peers. Merging unique data on lawyers’ careers from nearly 400 Shanghai law firms with rich information from 134,000 court judgements, I create novel indicators to measure lawyers’ performance in civil litigation. Specifically, based on Chinese civil practice I use the amount of court fees to measure the size of a case, and the assigned division of court fees between the litigants to measure the judgement outcome. I find that female law associates’ promotion rates increase relative to their male counterparts when they have more female bosses (the partners in their firm). Further, the primary mechanism for this effect is that female bosses assign higher- value cases to their female subordinates, at no cost in terms of performance, and with no apparent reductions in men’s advancement. In contrast to female bosses, however, having more female peers reduces women’s promotion rates, suggesting that there may be gender- specific intergroup competition in these firms.