Discrete choice and survival models in employee turnover analysis
| DOI | https://doi.org/10.1108/ER-03-2017-0058 |
| Published date | 12 February 2018 |
| Pages | 381-395 |
| Date | 12 February 2018 |
| Author | Rafa Madariaga,Ramon Oller,Joan Carles Martori |
| Subject Matter | HR & organizational behaviour,Industrial/labour relations,Employment law |
Discrete choice and survival
models in employee
turnover analysis
Rafa Madariaga, Ramon Oller and Joan Carles Martori
Department of Economics and Business,
The University of Vic –Central University of Catalonia, Vic, Spain
Abstract
Purpose –The purpose of this paper is to assess the capacity of two methodological approaches –discrete
choice and survival analysis models –to investigate the relationship between socio-economic characteristics
and turnover in a retailing company. A comparison of the estimation results under each model and their
interpretation is carried out. The study provides a guide to determine, assess and interpret the effects of
different driving factors behind turnover.
Design/methodology/approach –The authors use a data set containing information about 1,199 workers
followed up between January 2007 and December 2009. First, not distinguishing voluntary and involuntary
resignation, a binary logistic regression model and a Cox proportional hazards (PH) model for univariate
survival data are set up and estimated. Second, distinguishing voluntary and involuntary resignation, a
multinomial logistic regression model and a Cox PH model for competing risk data are set up and estimated.
Findings –When no distinction is made, the results point that wage and age exert a negative effect on
turnover. Risk of resignation is higher for male, single, not married and Spanish nationals. When the
distinction is made, previous results hold for voluntary turnover: wage, age, gender, marital status and
nationality are significant. However, when explaining involuntary turnover, all variables except wage lose
explaining power. The survival analysis approach is better suited as it measures risk of resignation in a
longitudinal way. Discrete choice models only study the risk at a particular cut-off point (24 months in case of
this study).
Originality/value –This paper is a systematic application, evaluation and comparison of four different
statistical models for analysing employee turnover in a single firm. This work is original because no
systematic comparison has been done in the context of turnover.
Keywords Turnover, Survival analysis, Discrete choice models
Paper type Technical paper
1. Introduction
Human resources create a sort of competitive advantage in a way that is difficult to
substitute, to copy or imitate (Barney, 1991; Barney and Wright, 1998; Ferris et al., 1999).
The management literature has highlighted this fact and has devoted great efforts in the
study of different approaches to human resources management (Price, 1977; Turner, 2010;
Morrell et al., 2001, 2004; Lévy-Garboua et al., 2007; Guest, 2011). One of the most prominent
questions in this literature has been the analysis of the stability of the employees and
turnover. Discussions about operational definitions, measures and modelling (Turner, 2010;
Ilmakunnas and Maliranta, 2003) have also taken place because measurement is central to
the development of the theories and their empirical validation.
Management and organisational literature has developed different research lines and
approaches. One of the most fruitful has been assessing the real cost of such asset loss and
recovery. The cost components are usually classified into two groups: direct costs ( firing
costs, recruiting, screening and training) and indirect costs (production and productivity
losses, service quality decreases). Although much of turnover is costly it may also lead to
benefits if low-productivity workers are more likely to leave (i.e. functional turnover). Such
an argument implies that optimal turnover rate is not zero. In this line, Davidson et al. (2010)
present a study for Australian four and five stars hotels. A second line of research focuses
on the general relationship between turnover and performance (Ferris et al., 1999;
Employee Relations
Vol. 40 No. 2, 2018
pp. 381-395
© Emerald PublishingLimited
0142-5455
DOI 10.1108/ER-03-2017-0058
Received 10 March 2017
Revised 16 October 2017
6 November 2017
Accepted 7 November 2017
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/0142-5455.htm
381
Discrete choice
and survival
models
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