3610.25.Labour turnover

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					                              LABOUR TURNOVER

Turnover means “change”. A change in the financial status of an organization is called
“the financial turnover”. A change in the number of employees of an organization is
called “The labor turnover”. Labor turnover is a major problem of economies across
globe. Any kind of increase or decrease in the manpower is known as “labor turnover”.
Good organizations prepare a regular report of employees joining or leaving the
organization in a week or month. Both attrition and recruitment of employees contribute
towards labor turnover.

An employee leaves an organization for various reasons. Some of the avoidable reasons
are low job satisfaction, low pay, risky or monotonous work, low scope for development
etc. Some of the unavoidable reasons are death, retirement, accident, poor health etc.

Some reasons of increase in number of employees are merger, acquisition, expansion,
diversification, replacement of an employee, changes in laws or technology, increase in
production facilities etc.

Whenever an employee leaves or joins an organization it undergoes a phase of low
productivity. Additional expenses are incurred on recruitment of new employee like for
advertising of job, time taken for interviews etc. Moreover, the new employee has to be
trained for job accordingly. Hence both money and time are wasted in training process.
Replacement of an employee creates insecurity among others.

Every good organization prepares a report of labor turnover to refer and rectify the
avoidable causes of turnover. Below are methods used to estimate turnover:

Average No. = (No. of employees at start + No. of employees at end) / 2

• Separation Method/Rate:
(Number of employees separated in a period / Average number of employees in the
period ) * 100

• Replacement Method/Rate:
(Number of employees replaced in a period / Average number of employees in the
period) * 100

• Flux Method/ Rate:
{(No. of employees separated + No. of employees replaced) / Average number of
employees in the period } * 100

Costs of labour turnover:
   Procurement costs
   Training costs
   Loss of productivity
   Higher accident rates
   Scrap and waste rates
   Additional wages in the form of overtime pay

Effects of labour turnover:
1.Effects on the employer
   More money to be spent on advertising, interviews and selection of new employees
   Training workers
   Team spirit among workers is disturbed
   Market reputation of the employer is disturbed
   Management may not be able to fill the vacant seats quickly

2.Effects on the employees
   Due to shifting of employment, a worker might have to sacrifice the benefits of his
    previous service
   The worker may not be able to adjust to a new job
   A worker who changes his job quite often may be looked upon by others with

Control of labour turnover:
   Satisfactory wage rates
   Proper working conditions
   Good training programmes
   Welfare programmes
   Proper grievance settlement machinery
   Proper supervision
   Motivating incentive plans

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