Labour Turnover — Meaning, Causes, Effects and Remedial Measures

Meaning

Labour Turnover is the rate of change in the workforce of an organisation during a period — the extent to which workers leave and are replaced. A high labour turnover means workers are leaving and being replaced frequently, which is costly and disruptive; a low turnover means a stable workforce. It is expressed as a percentage.

Measurement of Labour Turnover

Three methods are commonly used (Average Number of Workers = (Number at the beginning + Number at the end) ÷ 2):

• Separation Method = (Number of Separations during the period ÷ Average Number of Workers) × 100. 'Separations' = workers who left (resignation, retirement, discharge, death).
• Replacement Method = (Number of Replacements ÷ Average Number of Workers) × 100. 'Replacements' = new workers engaged to replace those who left (workers engaged for expansion are NOT replacements).
• Flux Method = ((Number of Separations + Number of Replacements) ÷ Average Number of Workers) × 100. It captures the total change (both leaving and replacing).

Causes of Labour Turnover

Causes are grouped as:

• Avoidable causes (the organisation could prevent these): low wages, poor working conditions, lack of promotion/growth prospects, bad relations with supervisors, unfair treatment, lack of job security, absence of welfare facilities.
• Unavoidable causes (largely outside the organisation's control): retirement, death, illness/disability, marriage (relocation), a worker moving for family reasons, dismissal for genuine misconduct or inefficiency, personal betterment elsewhere.

Effects of Labour Turnover

High labour turnover is costly because of:

• Cost of recruitment and selection of replacement workers (advertising, interviewing, engaging).
• Cost of training the new workers, and the lower output while they are still learning.
• Loss of output during the interval between a worker leaving and a replacement becoming fully productive.
• Higher spoilage and defectives, and more accidents, from inexperienced new workers.
• Increased wear and tear on machinery handled by untrained workers, and loss of experienced hands.
• Loss of morale among remaining workers when turnover is high.

Remedial Measures (to reduce Labour Turnover)

• Pay fair wages and provide good working conditions and welfare facilities.
• Introduce incentive and bonus schemes so effort is rewarded.
• Provide security of employment and clear promotion/career prospects.
• Maintain good relations between management and workers, with a fair grievance-handling system. …