Labour Turnover and Recruitment Strategies

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Questions and Answers

What is one of the key components required in the memorandum of association?

Name of the director

Procedures for business operation

Name, address, and contact number (correct)

Revenue sharing percentage

Which of the following is NOT an advantage of establishing a company?

Potential management issues

Difficult to monitor (correct)

Easy expansion

Easy to manage

What is included in the articles of association?

Maximum share capital

Declared aims of the company

Procedures to be followed (correct)

Contact number of the director

What is a disadvantage faced by franchisees?

Proportion of revenue sent to the franchisor Signup and view all the answers

What potential issue may arise from management in a company structure?

Potential management issues Signup and view all the answers

What is the formula used to calculate labour turnover?

Number of employees leaving in 1 year / average number of employees employed * 100 Signup and view all the answers

Which of the following is a negative consequence of high labour turnover?

Increased costs of recruiting new employees Signup and view all the answers

What is a benefit of external recruitment?

Bringing new ideas into the organization Signup and view all the answers

Which of the following recruitment methods is described as 'already known to the business'?

Internal recruitment Signup and view all the answers

What may be a result of low-skilled workers being replaced by productive ones?

Enhanced organizational efficiency Signup and view all the answers

Which of the following is NOT a benefit of external recruitment?

Immediate understanding of company culture Signup and view all the answers

What is a key impact of high and increasing labour turnover on a company?

Increased employee discontent Signup and view all the answers

How does training and development benefit employees?

Improves their efficiency and productivity Signup and view all the answers

What characterizes a free market economy?

Only private sector involvement. Signup and view all the answers

Which of the following is an advantage of a mixed economy?

Access to essential services like health care. Signup and view all the answers

What is a key feature of a sole trader?

Owned and controlled by one person. Signup and view all the answers

What is a disadvantage of a public limited company?

High legal formalities. Signup and view all the answers

In a command economy, which statement is true?

The public sector exclusively controls resources. Signup and view all the answers

What is a primary advantage of being a sole trader?

Ease of setup and management. Signup and view all the answers

What is a common challenge faced by sole traders?

Limited financing options. Signup and view all the answers

Which of the following best describes the relationship between a business and its owner in a sole trader setup?

They are considered one and the same. Signup and view all the answers

What is one disadvantage commonly associated with public-sector enterprises?

Lack of profit focus Signup and view all the answers

What is a key characteristic of holding companies?

They own multiple companies without unified control Signup and view all the answers

What is a primary risk involved in joint ventures?

Potential conflicts between partners Signup and view all the answers

Which method is NOT typically used to measure the size of a business?

Customer satisfaction ratings Signup and view all the answers

What is one challenge faced by government-subsidized businesses?

Potential government interference Signup and view all the answers

What is a distinct advantage of joint ventures?

Shared costs and risks Signup and view all the answers

What typically characterizes the financial condition of public-sector enterprises?

Shortage of capital and finance Signup and view all the answers

What may happen to a joint venture if one partner fails?

The project can be jeopardized Signup and view all the answers

What is a potential form of assistance that governments may provide to help small businesses?

Reduced rate of tax Signup and view all the answers

Which of the following is a reason businesses seek growth?

Lower risks Signup and view all the answers

What benefit do objectives provide to a business?

A sense of direction Signup and view all the answers

Which problem might small businesses face that could lead them to seek government assistance?

Problems raising finance Signup and view all the answers

What is NOT a benefit of having clear objectives within a business?

Eliminates all risks Signup and view all the answers

What can result from achieving economies of scale?

Lower production costs per unit Signup and view all the answers

Which operational aspect may be affected by family conflicts in a business?

Management effectiveness Signup and view all the answers

Which of the following increases the power and status of a business?

Increased market share Signup and view all the answers

Study Notes

Labour Turnover

Measures the rate employees leave an organization
Formula: (Number of employees leaving in 1 year / Average number of employees employed) * 100
High and increasing labour turnover indicates low morale and employee discontent
Increases costs of recruiting, selecting, and training new workers
Customer service may be compromised
Difficult to establish loyalty and team spirit
Low-skilled workers may be replaced by more productive ones
Can bring new ideas
May reduce costs if the business is planning redundancy and rationalisation

Types of Recruitment

External Recruitment
- Brings new ideas
- Wider choice of applicants
- Avoids jealousy and resentment
- Standard of applicants may be higher
Internal Recruitment
- Employees already known to the business, no need for induction training
- Employees known to the selection team

Types of Economies

Free Market Economy:
- Only private sector, no government intervention
Mixed Economy:
- Both private and public sectors
- Governments and individuals make decisions together
- Governments usually offer essentials like healthcare and education
Command Economy:
- Only the public sector

Sole Trader

Business owned by one person
Owner owns and controls the business
No formal legal structure: business and owner are considered one and the same
Advantages:
- Easy to set up and manage
Disadvantages:
- Limited finance (capital)

Public Limited Company (PLC)

Legal right to sell shares to the public
Advantages:
- Easy, risk-free way of expansion
- Easy to manage
- Still have some control
Disadvantages:
- Potential management issues
- Difficult to monitor

Franchise

Business uses the name, logo, and trading methods of a larger company
Franchisee Advantages:
- Lower risk, as the business is already established
- Good motivation
Franchisee Disadvantages:
- Proportion of revenue sent to the franchisor

Public Sector Enterprise

Known as public corporations
In the public sector
Profit is not their main aim
Advantages:
- Managed with social objectives rather than profit
Disadvantages:
- High chances of inefficiencies
- May operate even if making a loss
- Subsidies may encourage inefficiency
- Government may interfere in business decisions

Holding Companies

Business that owns and controls many different companies, but is not unified as one
Advantages:
- Higher status
- Ability to raise capital from the sale of shares
Disadvantages:
- Difficult to sell shares
- Original owner may be able to retain control
- Have to send accounts to companies’ house – less secrecy

Joint Venture

Two or more businesses agree to join for one project
Reasons:
- Shared costs and risks
- Different companies' different strengths
- Together, they are more powerful
Risks:
- Conflicts
- Errors or mistakes
- Business failure of one partner risks the whole project

Business Growth

Reasons for Growth:
- Increased profits
- Increased market share
- Economies of scale
- Lower risks
- Increased power and status
- Ability to be more competitive
- Increased value of the business

Measuring Business Size

Number of Employees
- Measured on the basis of the number of workers employed

Small Business Support

Governments may provide assistance to small businesses in the form of:
- Reduced rate of tax
- Loan guarantee schemes
- Information, advice, and support
- Aid designed to overcome specific problems like:
  - Lack of specialist management expertise
  - Problems raising finance
  - Marketing a limited product range

Importance of Objectives

SMART Objectives:
- Specific: Clearly defined without ambiguity
- Measurable: Set quantifiable targets
- Achievable: Realistic and achievable
- Relevant: Aligned with business goals
- Time-specific: There must be time limits to the objectives established

Benefits of Objectives

Provides a sense of direction
Helps improve the focus of individual employees and departments
Provides a framework for decision-making

Small Business Disadvantages

Traditional:
- Reluctant to change (inflexibility)
Conflicts:
- Family problems may affect business management

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Description

Explore the key concepts of labour turnover and recruitment strategies in this quiz. Understand the impact of employee turnover on business operations and the advantages of both external and internal recruitment methods. Test your knowledge on how these elements influence productivity and company morale.