Methodology for relating the cost of employee turnover, employee retention, and lost production costs

Employee turnover generates hidden costs that cannot be recovered, competing with retention costs and their production impact. Using a mathematical algorithm, this study aims to develop a methodology to figure out lost production and related fixed manufacturing overhead costs. This will allow us to estimate the cost of lost output from an employee's layoff 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 against retaining employees, comparing them to the associated costs of increased production and marginal income from the retained employee.