ICOA Seminar: The value of long-term employer-employee cooperation: A study of job satisfaction surveys and employee retention

Abstract

In this paper, I study an employment situation where the employer and the employees cooperate about the implementation of a job satisfaction survey. Cooperation is valuable because it improves the firm’s ability to predict employee quits, but it is only an equilibrium outcome because the employer-employee relation is repeated and long-term. The empirical analysis shows that the cooperation reduces the firm’s employee turnover costs by 16 per cent each year; a cost reduction which clearly exceeds the cost of conducting the survey. The analysis also reveals that the firm is willing to sacrifice profits corresponding to 17 per cent of employee turnover costs in a given year to be able to sustain the cooperative relationship with the employees.

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