## Labour Turnover
Definition: The rate of change in the composition of the labour force during a specified period, measured against a suitable index.
---
### Key Terms
| Term | Meaning |
|---|---|
| Separation | Old employee leaves; no new employee joins |
| Replacement | Old employee leaves; new employee joins in place |
| New Recruitment | New employee joins for expansion; no old employee leaves |
| Accessions | Replacement + New Recruitment |
---
### Causes of Labour Turnover
I. Personal Causes (employee-initiated)
- Seeking better job opportunities
- Premature retirement due to ill health or old age
- Domestic problems and family responsibilities
- Discontent with job/work environment
II. Unavoidable Causes (management has no choice)
- Seasonal nature of business
- Shortage of raw materials, power, or slack market
- Change in plant location
- Worker disability making them unfit for work
III. Avoidable Causes (management must address proactively)
- Dissatisfaction with pay, working hours, or conditions
- Strained relationships with management or co-workers
- Lack of training and promotion opportunities
- Lack of recreational/medical facilities
> Avoidable causes require continuous management attention to keep turnover low.
---
### Costs of Labour Turnover
| Type | What it Covers | Relationship to Turnover Rate |
|---|---|---|
| Preventive Costs | Medical services, welfare schemes, pension schemes | Inversely related — higher preventive spend → lower turnover |
| Replacement Costs | Recruitment, selection, training of new workers | Directly related — higher turnover → higher replacement cost |
Optimum Point: Each company must find the labour turnover rate at which total cost (preventive + replacement) is minimised.
---
### Effects of HIGH Labour Turnover
- Disrupted, uneven production flow
- Low productivity of new workers initially
- Higher training and induction costs
- Increased material wastage and tool breakage by inexperienced workers
### Effects of LOW Labour Turnover
- Minimum material wastage, tool breakage, machine breakdowns
- No loss of customers (timely, quality supply maintained)
- Fewer accidents
- Low recruitment and training costs
- Consistent achievement of production targets
---
### Steps to Minimize Labour Turnover
1. Exit Interview — Identify reasons for leaving from outgoing employees
2. Job Analysis & Evaluation — Understand job requirements before recruiting
3. Scientific Recruitment, Placement & Promotion — Structured, merit-based processes
4. Enlightened Management Attitude:
- Frame service rules collaboratively with workers before implementation
- Provide education and training facilities
- Establish a formal grievance-handling procedure
5. Joint Committee — Comprising both management and worker representatives to handle control issues and grievances