Training and turnover in the evolution of organizations

An organization's decision whether or not to train its workers affects the overall economy, even if the firm does not factor the economy into its decision. If all firms within an industry fail to train their workers, the whole economy suffers. Hence, training workers is a type of public good, a category that encompasses a broad range of social dilemmas. Employees face a similar dilemma in their choice of how much to contribute to the overall productivity of the organization. If employees receive a share of the profits regardless of their contribution, some may decide to free ride on the efforts of their fellow workers. If all employees decide to do so, the company will fail. The authors study the dynamics of training and turnover in firms facing both organizational- and employee-level dilemmas. First they establish a simple model that captures those conflicts and incorporates imperfect information and both worker and organizational expectations. Next the authors summarize the different ways the dilemmas can unfold over time, collated from a number of computer experiments. The authors find a positive correlation between high productivity, low turnover and enterprise size, a relation that has also been observed in the empirical literature on training, stability and turnover in organizations.