“Labour Turnover”

Understand and define Labour Turnover

Labour Turnover, also known as employee turnover, refers to the rate at which employees leave a company and are replaced by new hires. It is a critical metric that measures the movement of personnel in and out of an organization over a specific period. Labour turnover is often expressed as a percentage and is a key indicator of workforce stability and organizational health.

Key Concept of labour turnover

• Voluntary Turnover: Employees leaving the organization willingly, such as resignations or retirements.
• Involuntary Turnover: Employees leaving due to circumstances beyond their control, such as layoffs or terminations.
• Overall Turnover Rate: The percentage of the total workforce that leaves the organization within a specific period.
• Departmental Turnover: Turnover rate calculated for specific departments or teams within the organization.
• Cost of Turnover: The financial impact associated with recruiting, training, and onboarding new employees to replace those who have left.

Importance of Monitoring Labour Turnover

• Indicates Workforce Stability
• Identifies Potential Organizational Issues
• Affects Productivity and Performance
• Impacts Employee Morale and Engagement in Glossary
• Provides Insights for Talent Management Strategies

FAQs

What is labour turnover in cost accounting?

High labour turnover can be caused by various factors, including poor management, inadequate employee engagement, lack of career development opportunities, and unsatisfactory working conditions.

How is the cost of turnover calculated?

The cost of turnover includes expenses related to recruiting, training, onboarding, and productivity loss during the transition. It can be calculated by adding these costs for each departing employee.

Is low turnover always positive for an organization?

While low turnover may indicate stability, it can also suggest a lack of innovation or reluctance to bring in new talent. Striking a balance is essential for organizational growth.

Can labour turnover be reduced?

Yes, strategies such as improving workplace culture, offering competitive benefits, providing career development opportunities, and addressing employee concerns can help reduce labour turnover.

How often should labour turnover be monitored?

Labour turnover should be monitored regularly, typically on a quarterly or annual basis, to identify trends and address potential issues promptly.