# Labour Turnover (LT)
## Definition
Labour Turnover = Rate of change in workforce (workers leaving and new workers joining an organisation).
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## Methods to Calculate Labour Turnover Rate
1. Replacement Rate Method:
$$LT = \frac{\text{Number of workers replaced in a period}}{\text{Average number of workers on roll}} \times 100$$
2. Separation Method:
$$LT = \frac{\text{Number of separations during the period}}{\text{Average number of workers on roll}} \times 100$$
3. Flux Method:
$$LT = \frac{\text{No. of separations + No. of replacements}}{\text{Average number of workers on roll}} \times 100$$
Flux Method (Extended — includes new recruitments):
$$LT = \frac{\text{Separations + Replacements + New Recruitments}}{\text{Average number of workers on roll}} \times 100$$
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## Causes of Labour Turnover
### 1. Personal Causes (Employee's own initiative)
1. Seeking better opportunity elsewhere
2. Premature retirement due to ill health or old age
3. Domestic problems and family responsibilities
4. Dissatisfaction with job/working conditions (partially avoidable)
### 2. Unavoidable Causes (Employer-driven)
| Cause | Remedy |
|---|---|
| Seasonal nature of business | Diversify product mix |
| Shortage of materials or market | Find new suppliers/markets |
| Change in factory location | Avoid unnecessary relocation |
| Worker's disability | Provide retraining |
### 3. Avoidable Causes (Management's responsibility)
1. Dissatisfaction with job, pay, or working hours
2. Poor relations with management/supervisors/colleagues
3. Lack of training facilities
4. Lack of recreational and medical facilities
5. Low wages and allowances
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## Effects of High Labour Turnover
1. Flow of production gets disturbed
2. New/inexperienced workers have lower initial efficiency
3. Even experienced new workers take time to adjust
4. Increased training cost
5. Higher material wastage by new workers
6. Increased recruitment cost
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## Costs of Labour Turnover
| Cost Type | Description | Impact |
|---|---|---|
| Preventive Costs (PC) | Costs to prevent turnover — welfare, pension, medical facilities | High PC → Low LTR |
| Replacement Costs (RC) | Costs due to high turnover — recruitment, training replacements | High LTR → High RC |
> Optimum: Balance PC and RC to minimise total cost of labour turnover.
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## Steps to Minimise Labour Turnover
1. Exit interviews — understand reasons for resignation
2. Job analysis and evaluation — place right person in right job
3. Scientific recruitment, placement, and promotion — structured HR processes
4. Healthy working atmosphere — training, education, and grievance resolution
5. Joint worker-management committee — structured grievance handling