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Labour Turnover

Labour turnover is the rate at which employees leave and are replaced in an organization, indicating workforce stability. It can result from personal, avoidable, or unavoidable causes, and its costs include both preventative and replacement expenses. Reducing high turnover can be achieved through satisfactory wages, good working conditions, and effective training and career development opportunities.

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79 views3 pages

Labour Turnover

Labour turnover is the rate at which employees leave and are replaced in an organization, indicating workforce stability. It can result from personal, avoidable, or unavoidable causes, and its costs include both preventative and replacement expenses. Reducing high turnover can be achieved through satisfactory wages, good working conditions, and effective training and career development opportunities.

Uploaded by

pokalepooja71
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We take content rights seriously. If you suspect this is your content, claim it here.
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LABOUR TURNOVER

Labour turnover refers to the rate at which employees leave an organization and
are replaced by new employees over a specific period. It is usually expressed as
a percentage and indicates the stability or instability of the workforce. High
labour turnover can be costly for an organization due to recruitment, training,
and reduced productivity, while low turnover may signify a stable work
environment.
Labour turnover is the rate employees leave a company relative to the average
number of people employed.
CAUSES OF LABOUR TURNOVER
Labour turnover can occur due to voluntary or involuntary reasons. Below are
some key causes:
1. Personal Causes - These are reasons related to the individual employee's
circumstances or preferences.
 Health Issues: Employees may leave due to physical or mental health
concerns.
 Family Responsibilities: Relocation, marriage, or caregiving duties for
family members.
 Career Changes: A desire to switch careers or industries entirely.
 Higher Studies: Employees may leave to pursue further education or skill
development.
2. Avoidable Causes - These are factors that the organization can address or
prevent with effective management and policies.
 Job Dissatisfaction: Due to lack of recognition, engagement, or
challenging work.
 Low Compensation: Inadequate salary, poor benefits, or lack of financial
incentives.
 Poor Working Conditions: Unsafe environment, excessive workload, or
lack of necessary tools.
 Lack of Growth Opportunities: Employees leave when they see no scope
for promotion or skill development.
 Workplace Culture Issues: Toxic work environment, favoritism, or poor
relationships with managers.
3. Unavoidable Causes - These are reasons beyond the organization's control
and are inevitable.
 Retirement: Employees leaving due to reaching retirement age.
 Personal Relocation: Moving to a different city or country for personal
reasons.
 Death or Illness: The sudden loss of an employee due to health-related
issues.
 Economic Downturns: When employees leave for industries that remain
stable in crises.
 Family Commitments: Marriage, childbirth, or family emergencies that
necessitate leaving the job.
COSTS OF LABOUR TURNOVER
The costs of labour turnover can be large and management should attempt to
keep labour turnover as low as possible to minimize these costs. The cost of
labour turnover may be divided into the following
 Preventative costs
 Replacement costs
Replacement costs - These are the costs incurred as a result of hiring new
employees. These include:
 Cost of selection and placement
 Inefficiency of new labour; productivity will be lower
 Costs of training
 Loss of output due to delay in new labour becoming available
 Increased wastage and spoilage due to lack of expertise among new staff
 The possibility of more frequent accidents at work
 Cost of tool and machine breakage
Preventative costs - These are costs incurred to prevent employees leaving and
they include
 Cost of personnel administration incurred in maintaining good
relationships and eliminating bullying in the workplace
 Cost of medical services including check-ups, nursing staff, and so on
 Cost of welfare services, including sports facilities and canteen meals
 Pension schemes providing security to employees
 Investigate high labour turnover rates objectively
HOW CAN HIGH LABOUR TURNOVER BE REDUCED?
 Paying satisfactory wages
 Offering satisfactory hours and conditions of work
 Creating a good informal relationship between employees
 Offering good training schemes and career or promotion ladder
 Improving the content of jobs to create job satisfaction
 Proper planning to avoid redundancies
 Investigating the cause of an high labour turnover
MEASUREMENT OF LABOUR TURNOVER: The labour
turnover rate can be measured by the application of any one of the following
three methods:

(i) Separation method:

(ii) Replacement method:


(iii) Flux method:

From the following data given by the Personnel Department calculate the
labour turnover rate by the application of above three methods:
No. of workers on the Pay Roll:
At the beginning of the month Jan, 91 900
At the end of the month 1,100
During the month 10 workers left, 40 persons were discharged and 150 workers
were recruited. Of these, 25 workers were recruited in the vacancies of those
leaving, while the rest were engaged for an expansion scheme.

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