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EFFECT OF LABOUR TURNOVER

MADE BY - SAHIL PATEL

ENROLLMENT NUMBER - 181320130041
SUBJECT - HUMAN RESOURCES MANAGEMENT
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EFFECTS OF TURNOVER

DEFINITION
04 THERE ARE TWO TYPE OF EFFECTS IN
LABOUR TURNOVER

WHAT LABOUR TURNOVER MEANS AND

HOW IT WORKS IN AN ORGANISATION. 1. POSITIVE
2. NEGATIVE

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WHY TURNOVER HAPPENS CAUSES OF LABOUR TURNOVER

THERE MUST BE MANY REASONS FOR
LABOUR TURNOVER IN AN THERE ARE TWO TYPE OF CAUSES
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1. AVOIDABLE
2. UNAVOIDABLE

CONTENT
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What is labour turnover ?

● Labour turnover can be defined as the overall change in the
number of people employed in a business entity during a
particular period.

● It takes into consideration the number of existing personnel,

new joinees and the total number of workers as listed in the
payroll at the end of a given period.
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Why labour turnover happens ?

● A high labour turnover rate is considered to be
unfavourable for the organization’s stability and can even
result in a temporary shutdown or strike.

● The entities, therefore, take up human resource as an

integral part of the business.
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● When we talk about the reasons behind a high labour turnover,

we come across the factors which are under control and others
which are beyond the regulation of the organization.

Causes
● Avoidable
● Unavoidable
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Avoidable causes
● The factors that are related to
the organizational facilities and
working conditions, the ones
which the management could
modify to retain the workforce
are considered as preventable
causes.
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Unavoidable causes
● The workers are sometimes compelled
to depart from the organization, for
the inevitable reasons. Neither the
organization nor the employee can
take any step to avoid such
circumstances.

● Some of these causes include death,

severe accident, marriage or
retirement of the personnel. The
various others are mentioned in the
given image:
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EFFECTS OF TURNOVER
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Effect of labour turnover :
● When a worker departs from the organization, it impacts a
part or sometimes overall working of the entity.

● This impact could be both constructive and destructive for

the organization at the same time. The effect is even more
if the workers leave in groups, creating a dent in
productivity.
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Positive effects:
Labour turnover also has some benefits to the organization, which are discussed in detail
below:

● Improves Organizational Culture: Labour turnover means the entry of new

people with different values, mindsets and beliefs to enrich the organizational
culture.
● More Talented Personnel: New hires can be more efficient, knowledgeable,
sharp and active than the existing workforce.
● Less Expensive Resource: With constant hikes and promotion, the existing
workers cost more in comparison to the inexpensive trainees who replace them.
● Infusion of Fresh Ideas: The new resources bring with them innovative
thoughts and ways of doing things, which is quite beneficial for organizations.
● Better Skills and Qualification: With evolving courses and skills training, the
organization can get fresh graduates possessing better competence.
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Adverse effects :
Let us first discuss the negative impact of labour turnover in the organization:

● Hampers Productivity: When a worker quits the job, the production is

temporarily ceased or slowed down until the new hire joins the organization.
● Decreases Morale: The co-workers feel demotivated when they notice that
the exiting employee is moving out for a better opportunity.
● Hikes Production Cost: The training or learning phase of the new worker,
increases expense due to slower productivity and high wastage.
● Training Expense: The wages paid to the trainee or new hire as well as the
mentor for that unproductive training period, is a considerable cost for the
organization.
● Replacement Cost: To fill the position of the exiting worker, recruitment of a
new staff involves advertising, hiring and training expenses.
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Conclusion:
● Labour turnover is usually high in private organizations where a large number
of workers are engaged in routine activities that do not require much expertise.

● However, the skills-based organizations try to maintain low labour turnover

rate. This is because they have to bear a considerably high cost of turnover if
their valuable resources exit the company.

● Though a small factor, if the employee orientation process is prominent, then

the workers tend to stay with the organization for a more extended period.