Labour Turnover and Recruitment Strategies

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

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.