Labour Turnover – In every organization employees are continuously coming in & going out due to several reasons. This activity, over a period of time completely changes the composition of labour working in the organization. The percentage change in composition of labour, measured over a period is called as ‘Labour turnover’.
Measurement – Measurement of labour turnover in any organization is necessary as it helps in control of labour turnover & also facilitates comparison with other organizations. Following are some of the methods for comparison –
a) Separation Method- Separations in an organization means the total number of workers leaving the organization due to any reason (Death, retirement, dismissal, superannuating, transfer, promotion or demotion, better prospects, ill health etc)
Labour turn over = No. Of separations in a period (X) 100
Average number of workers
Average no. Of workers for any period = Opening no. + Closing No.
2
The method however gives incorrect results if there is surplus labour removal.
b) Replacement method – The method calculates labour turnover on the basis of number of people replacing the separations carried out. It does not consider such employees who have joined on completely new posts.
Labour turn over = No. Of Replacements in a period (X) 100
Average number of workers
The method is not suitable if the organization does not replace its separated staff promptly.
c) Flux or Combination method – This method considers both separations & replacements .It does not have the disadvantages of previous 2 methods. But it is not suitable in a growing organization.
Labour turn over = No. Of separations in a period (+) No. Of Replacements in a period (X) 100
Average number of workers
Causes of Labour Turnover – The causes can be divided into following categories- A) Work / Employment related causes – They can be further subdivided in to avoidable & non avoidable causes,
a) Avoidable causes - 1) Low wages & earnings 2) Bad interpersonal relations among workers or between workers & supervisors 3) Unsatisfactory working conditions 4) Union problems 5) Management attitude towards workers’ problems 6) Lack of job satisfaction 7) Lack of conveyance, accommodation, educational facilities, welfare facilities etc 8) Unsuitable job or lack of training 9) Odd working hours 10) Defective transfer or promotion policies 11) Lack of proper incentives & bonus etc.
b) Unavoidable causes – 1) Termination due to disciplinary action 2) Super-annuation of workers 3) Retrenchment due to low demand, market conditions or low season 4) Illness, accident, death, marriage (especially for women workers)
B) Personal causes – 1) Change of job due to better prospects 2) Family troubles & constraints 3) Better place, environment, 4) Health reasons etc.
Effects of Labour turnover – some labour turnover is inevitable & unavoidable in every organization. It is in fact good to have new ideas & new blood being introduced in the organization. But too much LT has a lot of adverse effects as follows – 1) Expenses increase due to cost of selection training etc. 2) New workers may create problems due to their lack of experience- they may be slow in speed, they may handle tools & material carelessly resulting in wastages, increased scrap & accidents.3) There may be more scrap, defectives etc. 4) It may disturb the whole routine of work. 5) Friction may be created in between old & new workers 6) Additional costs are incurred
Costs of Labour turnover & their treatment – A) Preventive Costs – These costs are incurred to prevent labour turnover from happening by keeping the workforce satisfied & contented in the organization. They are – a) Costs of personnel management b) Costs of welfare activities & services (subsidized meals, canteen, education, training & transport of workers, housing & medical facilities. Pension schemes etc c) Bonus & incentives. These costs are apportioned among various departments in the organization on the basis of number of workers in them.
B) Replacement Costs – These are costs incurred due to replacement of old workers by new workers. They are – a) Recruitment & selection costs b) Training costs c) Loss of output due to delay in selection of workers d) Losses & expenses due to inexperience of new workers (As stated in effects). These costs are directly charged to a specific department if the labour turnover has occurred due to such department’s working policies. But if LT is a common occurrence due to overall policy of management, the costs are divided among all departments in proportion to number of workers.
Control over Labor turnover – High LT is harmful to the organization. Even if it is not possible to control LT to the fullest extent, the management should at least try to control it. For this purpose the following measures can be tried –
1) Employment of workers on right & suitable jobs according to their abilities & interest should be made.
2) Working conditions should be safe, satisfactory & pleasant.
3) A sound wage system & a suitable incentive schemes should be given to workers to motivate them & to improve their earnings.
4) Deserving employees should be regularly provided opportunities for promotion & career development.
5) Management attitude towards workers should be sympathetic & understanding.
6) Labour grievances & disputes should be solved immediately & effectively. The unions should be given due consideration & a proper role to play.
7) Labour participation in management & work planning should be encouraged.
8) Effective communication about work & other matters should be ensured.
9) Labour Turnover Accounting should be introduced
10) Periodic training & up-gradation of knowledge programs should be carried out for existing workers.
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