Does losing temporary workers matter? The effects of planned turnover on replacements and unit performance

This study examines the performance consequences of planned turnover. In particular, we investigate the departure of temporary workers due to the expiration of their contracts. We reconcile the contradictory predictions of collective turnover research—that any type of worker’s exit impairs organizational performance—and of contingent work research—that temporary workers’ exits improve organizational performance because they provide flexibility. We argue that the planned turnover of temporary workers has an inverted U shaped relationship with unit performance because it combines flexibility benefits and disruption costs. We also argue that the costs of planned temporary worker turnover are moderated by the proportion and the firm-specific experience of their replacements. We test these arguments using longitudinal monthly data from a leading multinational company in the food and beverage industry, and find support for our hypotheses. The study suggests that managers hiring temporary workers should consider the cost of losing them and challenges the widespread scholarly and managerial assumption that temporary workers are disposable resources.