Labour Turnover (PDF)

# Labour Turnover ## Meaning It is the rate of inflow and outflow of workers in an organisation during a particular period of time. It is the % change in labour forces in an organisation during a particular point of time. A low labour turnover implies that employees are satisfied and the organisa...

# Labour Turnover ## Meaning It is the rate of inflow and outflow of workers in an organisation during a particular period of time. It is the % change in labour forces in an organisation during a particular point of time. A low labour turnover implies that employees are satisfied and the organisation is well managed, but a high labour turnover implies that there is a frequent change in labour due to low salary or poor working environment. ## Methods of Measuring Labour Turnover There are 4 methods to measure labour turnover: 1. **Separation Method:** This method takes into account those workers who left or quit the organisation. - Labour turnover = Number of workers separated during the period ÷ average number of workers during the period × 100 2. **Replacement Method:** This method takes into account those workers who were replaced in place of those workers who quit the organisation during the period. - Labour turnover = Number of workers replaced during the period ÷ average number of workers during the period × 100 3. **Flux Method:** This method takes into account the number of separation and replacement of workers during the given period . - Labour turnover = Number of workers separated during the period + Number of workers replaced during the period ÷ average number of workers during the period × 100 4. **Average Flux Method:** This method takes average of the number of employees left and replaced during the period. - Labour turnover = Number of workers separated during the period + Number of workers replaced during the period ÷ 2 ÷ average number of workers during the period × 100 ## Cause of Labour Turnover 1. **Avoidable Causes:** These are those causes which can be avoided if precautions were taken. It includes: - Dissatisfaction with wages and salary - Dissatisfaction with the working environment - Bad relations with supervisor or co-workers - Dissatisfaction with long hours of work - Bad relations with management and owners, etc. 2. **Unavoidable Causes:** These causes which cannot be prevented even if precautions were taken. It includes: - Death of worker - Retirement of worker - Accident of the worker - No job security - Seasonal Nature of business, etc. 3. **Personal Causes**: Sometimes, workers leave an organisation purely on personal grounds. It includes: - Getting a better job - Dislike the previous job - Marriage of female worker - Ill health of the worker, etc. ## Treatment of Labour Turnover Cost of labour turnover is divided into two types: 1. **Preventive Cost**: These costs are incurred by the company to satisfy the workers and to keep them in work, preventing them from leaving the organisation. It includes: - Cost of providing medical facilities to workers - Cost of providing free education to children of employees - Cost of subsidised food to workers - Cost of gratuity, pension, provident fund, etc provided to workers, etc. - **Treatment:** Preventive costs should be apportioned to different departments on the basis of the number of workers. 2. **Replacement Cost**: These costs are incurred in recruitment and training of new workers. It includes: - Salary of officer who were involved in recruitment, training and selection of new workers. - Loss due to inefficiency of new workers like waste, scrap, spoilage, defective etc. - Loss due to frequent accident and break down of machinery, etc. - **Treatment:** Replacement cost should be distributed among different departments on basis of actual number of workers replaced in each department.