What is Labour Turnover?Measurement of labour Turnover,categories Labour Turnover
Concept of labour Turnover
An organization has a perpetual existence, but it working force does not remain the same all the time. Some old worker leaves the organization and some new workers joint it. This is a natural phen
The cost of labour increase when the experienced workers go out of the firm and new and inexperienced worker are hired who are to be trained. Therefore, the labour turnover proves to very costly for the labour business and every effort should be made or reduce the frequency of labour turnover.
Cause of labour Turnover
The main causes of labour turnover can be dividing into two categories:
Effects of labour Turnover
High labour turnover results in increased cost of production due to the following reasons:
• Interruption in work leading to a decrease in production.
• Cost of selecting new workers.
• Increased cost of training.
• New workers' inefficiency results in less economic use of tools and equipment and excessive wastage of materials.
• Higher accident rate.
• Overtime wages increase due to an excessive numbers of separations, causing difficulties in adhering to the delivery dates of the contracts.
Cost of Labour Turnover
The cost of labour turnover can be divided into two parts:
a. Preventive costs: preventive cost denotes the costs, which are incurred to prevent excessive labour turnover by keeping a satisfied labour force. These are the costs which are incurred in order to keep the workers satisfied and thus to act as a discouragement against leaving employment. These include:
• Cost of personal administration.
• Cost of medical services.
• Cost o welfare activities.
• Cost of welfare activities.
• Cost of gratuity pension schemes.
• A portion of high wages, bonus and perquisites.
b. Replacement costs: replacement costs refer to the cost of the recruitment, training and absorption of new workers. These included:
• Cost of recruitment and training of new workers.
• Loss of output due to interruption and inefficiency of new workers.
• Cost of wastage, scrap and defective work.
• Compensation due to frequent accidents.
• Cost of additional supervision.
Treatment of cost of labor turnover
The preventive and replacement cost are the cost caused due to labour turnover. Preventive costs should be charges as a works overhead item and apportioned to different department on the basis of number of workers engaged in each department. Replacement cost should be treated on the same basis if they arise on account of short sighted policy of the management. However, if they arise on account of the fault a particular department, they should be charged directly to that department.
It is to be noted that labour turnover cannot be completely but its rate can be kept at a considered able low level taking such steps, which improve employee morale and create a congenial atmosphere in the organization.
Control and minimization of labour turnover
Labour turnover can be minimized be taking following steps:
a. Right job for the right man: this is the most significant aspect on which the management should concert rate. Every worker is not fit to handle every type of job. If a worker is place as per the qualifications and the attitude of the every type of job. If a worker is place as per the qualification and the attitude of the person concerned, fewer problems are likely occurred.
b. Farsightedness: management should also think of requirements of the future. In the short run, it may have to incure more expenditure on providing amenities to work.
c. Direct contact: there should be a straight and continuous dialogue between the workers and management. It leads to disclosure of workers' problems and their psychology. As a result, the problems can be sorted out by negotiation across the table.
d. Standardization of systems and procedures: all systems and procedure regarding selection, training, use of labour force etc. should be standardized scientifically. Properly laid down rules and regulations in less conflict.
e. Proper implementation of scientific systems with flexibility: A proper and objective system of implementing the labour rules and regulations should be developed. The management has to deal with human beings with human approach.
Measurement of labour Turnover
Labour turnover may be measured by any of the following methods. The choice of a particular method depends on whether emphasis is given on labour separations, replacements or both. But once a particular method is choices, it should be adopted consistently so that comparison may be possible.
a. Separation rate method: this is the most commonly used method. This method takes into consideration the number of workers left or discharged during the period. Labour turnover is determined by dividing the total number of separations during the month/ years by the average number of workers employed during the month/ year and multiplying that by 100.
Labour Turnover = No. of workers separate during the period/ average no. of workers during the period x 100
An average no. of workers employed during the period can be ascertained by means of the following formula:
b. Replacement rate method: this method takes into consideration the number of workers replaced during the period irrespective of the number of workers left or discharged. Dividing the number of workers replace during the month/ year by the average number of worked employed during the month/ years and multiplying that by 100 determine labour turnover.
Labour Turnover = No. of worker replaced during the period/ average number of workers during the period x 100
It must be recombined that while calculating the number of replacement, new recruitment made in connection within the expansion programmer shall not be considered.
Labour Turnover = No. of works separated No. of workers replaced/ average no. of workers during the period x 100
c. Equivalent annual rate of labour Turnover: in case it is decided to related the labour turnover rate for a month or fraction of a month to annual rate of turnover, this may be done by finding out "equivalent annual Rate'' with the help of the following formula:
Equivalent annual Rate= Tu-rover rate x 365/ No. of day in the relative period x 100
1. Write any three ways of controlling the labour turnover.
Any three ways of controlling the labour turnover are mentioned below:
a. Right job for the right man: this is the most significant aspect on which the management should concentrate. Every worker is not fit to handle every type of job. If a worker is placed as per the qualifications and the attitude of the person concerned, fewer problems are likely occur.
b. Farsightedness: management should also think of requirements of the future. In the short run, it may have to insure more expenditure on providing amenities to work.
c. Direct contact: there should be a straight and continuous dialog ed between the workers and management. It leads to disclosure of workers' problems and their psychology. As a result, the problem can be sorted out by negotiations across the table.
Any three ways of controlling the labour turnover are mentioned below:
a. Right job for the right man: this is the most significant aspect on which the management should concentrate. Every worker is not fit to handle every type of job. If a worker is placed as per the qualifications and the attitude of the person concerned, fewer problems are likely occur.
b. Farsightedness: management should also think of requirements of the future. In the short run, it may have to insure more expenditure on providing amenities to work.
c. Direct contact: there should be a straight and continuous dialog ed between the workers and management. It leads to disclosure of workers' problems and their psychology. As a result, the problem can be sorted out by negotiations across the table.
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