Methodology for Relating the Cost of Employee Turnover, Employee Retention, and Lost Production Costs (#1117)

Authors

SALAS HIDALGO, LUIS MIGUEL

VELASCO TAIPE, JORGE ANTONIO

Abstract

Employee turnover generates hidden costs that cannot be recovered and compete with retention costs and their production impact. This study aims to develop a methodology to calculate lost production and related fixed manufacturing overhead costs using a mathematical algorithm. This will allow us to estimate the cost of lost production from an employee's retirement until a replacement reaches the required efficiency, considering not only severance costs but also lost production costs. Additionally, we will analyze the cost-benefit of offering salary increases or other incentives to retain employees, comparing them to the associated costs of increased production and marginal income from the retained employee.