Labour Turnover

11 Key excerpts on "Labour Turnover"

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  eBook - ePub

  Economics of Fatigue and Unrest and the Efficiency of Labour in English and American Industry

  • P. Sargant Florence(Author)
  • 2013(Publication Date)
  • Taylor & Francis

    (Publisher)

  CHAPTER VI

  THE LOSS BY Labour Turnover

  LABOUR TURNOVER , alternatively called Labour Maintenance, Labour Recruitment or Labour Wastage, is the fluctuation in the personnel of an organization. It is measured, for any given year, by the number of persons hired to replace persons leaving the working force, taken in relation to the total number employed on the average. Thus, if four hundred persons were hired during the year to replace persons who were leaving or had left a factory employing five hundred on the average in a given year, the turnover rate would be said to be 80 per cent.

  This method of calculating the turnover rate from the replacements is not the only plan. Many prefer to calculate turnover from the total number of persons leaving, regardless of whether they were replaced. The results of the two methods do not differ greatly unless the total working force is being much increased or diminished, as may happen in times of a boom or a slump in business.

  Where the working force is being reduced those who are discharged merely on account of the general business policy, and not replaced, are said to be laid off ; and the method recommended is, therefore, equivalent to counting all those leaving, minus those laid off. For the detailed steps in recording turnover reference must be made to Part III, Chapter XIII.

  A—THE COST OF TURNOVER

  One of the earliest business estimates of the loss suffered through Labour Turnover, which may still claim to be one of the most thorough, is that made by Mr. Magnus Alexander in 1912. Economic conditions in that year were, after all, about as normal as they have ever been since, and no apology is needed for going into this estimate in some detail.

  A General Analysis

  Mr. Alexander investigated twelve engineering and metal-working factories, representative in size and character, and situated in different parts of America, in which some 40,000 men and women were employed. He subdivided the employees under investigation into five groups, and studied the requirements of each group as to the quantity and quality of instruction needed by new employees, and the effect of the work of new employees upon the economical conduct of the business as a whole.

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  Pocket Guide for Hospitality Managers

  • Conrad Lashley, Michael N. Chibili(Authors)
  • 2019(Publication Date)
  • Routledge

    (Publisher)

  creating operational difficulties, particularly when trained or frontline staff leave. Consequently many now have detailed records of the levels of Labour Turnover, though few account for it when measuring unit performance. This chapter argues that staff turnover can represent a considerable additional cost to the business. Unit managers can reduce the numbers of people who leave the organisation, but fundamentally the organisation needs to understand the levels, the causes, the costs of staff turnover, and the value of staff retention.

    5.2      Causes and types of staff turnover

  Staff turnover is best understood as the movement of labour out of and into a working organisation. As indicated earlier, some practitioners and academics see positive benefits of controlled staff turnover:

  •  If poor performers are the ones to leave the organisation. •  If new employees bring new skills and ideas. •  If the organisation is refreshed by change brought in by new staff.

  However, all too often it is the better staff who leave, and staff turnover is uncontrolled. In these circumstance staff turnover can:

  •  Wreck planning. •  Have a disastrous effect on staff morale. •  Represent a considerable extra cost to the business. •  Reduce service quality. •  Cause customer dissatisfaction.

  Frequently, a vicious cycle is established where high staff turnover results in hurried recruitment and selection, poor induction, limited training, supervisory and management pressure, and low morale, leading to further instability and Labour Turnover. Figure 5.1 shows this vicious cycle, and represents the experiences of many branded hospitality organisations.

  FIGURE 5.1 The vicious cycle of staff turnover

  Some departures from the organisation are unavoidable, because in many ways they are an inevitable aspect of organisational life. Some reasons for unavoidable staff turnover include:

  •  Retirement. •  Illness. •  Death. •  Marriage. •  Pregnancy. •  Leaving the area. •  Cases of students returning to college or home.

  However, where Labour Turnover is high, it is usually due to avoidable reasons that you, as a unit manager, can manage. Thus employee dissatisfaction with training and personal development, wage levels, management styles and policies, colleagues, and overall job satisfaction are issues that you can attempt to match with employee expectations. Some reasons for avoidable staff turnover include:

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  Employee Retention and Turnover

  Why Employees Stay or Leave

  • Peter W. Hom, David G. Allen, Rodger W. Griffeth(Authors)
  • 2019(Publication Date)
  • Routledge

    (Publisher)

  1

  WHAT IS EMPLOYEE TURNOVER, WHY IS IT IMPORTANT, AND HOW IS IT MEASURED?

  The Practical and Academic Significance of Turnover

  Employee turnover—or voluntary termination of employees from employing organizations (Mobley, 1982)—has attracted interest from employers and scholars alike for a century (Hom, Lee, Shaw, & Hausknecht, 2017). As early as 1917, management consultants and academicians have written about turnover’s costs, its amelioration, and its causes (Hom et al., 2017). Managers have long focused on employee turnover because of the personnel costs incurred when employees quit, such as those for hiring and training replacements (Cascio, 2000). To illustrate, turnover costs can range from 90% to 200% of annual pay (Allen, Bryant, & Vardaman, 2010). Though difficult to compute for some occupational fields, turnover can impair productivity because short-staffed workforces may underproduce, while inexperienced replacements may produce inefficiently during early employment (Hom & Griffeth, 1995).

  Beyond such familiar tangible expenses, other ramifications of high turnover may prove costly or worrisome (Hom & Griffeth, 1995). In particular, corporate America frets about excessive attrition among minority and female incumbents that can impede its progress toward a diversified staffing in executive posts or occupational fields where these demographic subgroups are underrepresented (Hom, Roberson, & Ellis, 2008). What is more, human capital loss can stymie how firms deliver products or services or even enter new markets. Thus, talent recruiters at Fortune 1000 firms report that unfilled STEM (science, technology, engineering, and mathematics) jobs resulted in “lower productivity” (56%) and “limits to business growth” (47%; Bayer Corporation, 2014). While the existence of a STEM shortage is widely debated, STEM attrition surely worsens the dysfunctional effects of insufficient STEM supply in firms (Mervis, 2014). Further, such talent losses most harm source firms when leavers join competing (destination) firms (and thus supply proprietary knowledge or former clients to them), or becoming new competitors (as start-ups; Campbell, Ganco, Franco, & Agarwal, 2012; Somaya, Williamson, & Lorinkova, 2008; Wezel, Cattani, & Pennings, 2006). Finally, turnover can endanger entire industries, such as manufacturing in export-oriented processing zones in developing countries (notably, China and Mexico). There, 60% to 100% turnover rates among Chinese and Mexican assemblers (Miller, Hom, & Gomez-Mejia, 2001; Qin, Hom, & Xu, 2019; West, 2004) can boost labor costs, product defects, and production shortfalls, and thus hamper global supply chains (dependent on finished goods) and export-driven growth of emerging economies (Jiang, Baker, & Frazier, 2009).

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  Resourcing and Talent Management

  The Theory and Practice of Recruiting and Developing a Workforce

  • Stephen Taylor(Author)
  • 2021(Publication Date)
  • CIPD - Kogan Page

    (Publisher)

  In these kinds of situation staff turnover over 15 per cent or so is seen as being a management issue that needs to be tackled. It is likely that substantial resources are currently being wasted as a direct result of excessive voluntary resignations. There is thus a strong business case for investment in retention initiatives. Conversely, in the following situations relatively high rates of turnover are more likely to be sustainable:

  • where labour markets are loose, making it easy to find replacement staff of the required quality when someone resigns
  • where new staff can be hired at relatively low cost (eg via a Jobcentre or through word-of-mouth recruitment)
  • where selection can be carried out easily and cheaply (eg a simple interview with one or two managers)
  • where training costs for new starters are low
  • where new starters are able to become fully effective in their jobs within a few days or weeks
  • where patterns of business are reasonably unstable or unpredictable on a week-by-week or month-by-month basis
  • where it is likely that compulsory redundancies will have to be made in the coming months
  • where leavers do not generally walk out of the door in possession of knowledge that would be of use to a competitor.

  Measuring turnover

  Measuring staff turnover, calculating (or at least estimating) its cost and benchmarking these figures against those of other comparable organisations are activities that form the starting point for developing a programme aimed at improving staff retention rates. By gaining a clear understanding of the size of the problem and the potential benefits associated with addressing it, HR managers are well placed to persuade their colleagues that there will be a return on investment if money is spent on a turnover reduction programme.

  Published evidence demonstrates that despite the generally acknowledged significance of employee turnover and retention as an issue, many employers in the UK take few formal steps to manage it systematically. Rankin (2008c) quotes research which suggests over a third of employers in the UK are unable to state their annual turnover level, while 70 per cent do not know how their rate compares with others in their industry. A recent CIPD (2020a) survey reported that less than a fifth of UK employers (18 per cent) calculate the cost of staff turnover in their organisations, while 14 per cent of respondents replied ‘do not know’ when asked this question.

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  eBook - ePub

  Resourcing and Talent Management

  • Stephen Taylor(Author)
  • 2018(Publication Date)
  • CIPD - Kogan Page

    (Publisher)

  In these kinds of situation staff turnover over 15 per cent or so is seen as being a management issue that needs to be tackled. It is likely that substantial resources are currently being wasted as a direct result of excessive voluntary resignations. There is thus a strong business case for investment in retention initiatives. Conversely, in the following situations relatively high rates of turnover are more likely to be sustainable:

  • where labour markets are loose, making it easy to find replacement staff of the required quality when someone resigns;
  • where new staff can be hired at relatively low cost (eg via a job centre or through word of mouth recruitment);
  • where selection can be carried out easily and cheaply (eg a simple interview with one or two managers);
  • where training costs for new starters are low;
  • where new starters are able to become fully effective in their jobs within a few days or weeks;
  • where patterns of business are reasonably unstable or unpredictable on a week-by-week or month-by-month basis;
  • where it is likely that compulsory redundancies will have to be made in the coming months;
  • where leavers do not generally walk out of the door in possession of knowledge that would be of use to a competitor.

  Measuring turnover

  Measuring staff turnover, calculating (or at least estimating) its cost and benchmarking these figures against those of other comparable organisations are activities that form the starting point for developing a programme aimed at improving staff retention rates. By gaining a clear understanding of the size of the problem and the potential benefits associated with addressing it, HR managers are well placed to persuade their colleagues that there will be a return on investment if money is spent on a turnover reduction programme.

  Published evidence demonstrates that despite the generally acknowledged significance of employee turnover and retention as an issue, many employers in the UK take no formal steps to manage it systematically. Rankin (2008d) quotes research that suggests over a third of employers in the UK are unable to state their annual turnover level, while 70 per cent do not know how their rate compares with others in their industry. For most, employee retention initiatives are short-term, ad hoc activities introduced in response to rising staff turnover rates. There are few examples of employers taking a proactive approach to prevent increasing turnover before it happens, and relatively few examples of organisations undertaking any kind of cost–benefit analysis of the initiatives they bring forward (CIPD, 2017b: 40). Part of the problem is that in order to embark on a meaningful, strategically driven programme to improve employee retention, calculating the likely costs and benefits, a fair amount of data has to be collected first. Where organisations have not in the past collected information about turnover, they need to start doing so before they can start thinking about the best methods of tackling it.

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  Unemployment: Theory, Policy and Structure

  • Peder J. Pedersen, Reinhard Lund(Authors)
  • 2017(Publication Date)
  • De Gruyter

    (Publisher)

  132 Per Vejrup Hansen For each person we also know the labour-market state at both points in time; this is rendered possible by a unique identification number for each individual (the Personal Number). Finally, it is possible concurrently to assess the change in the number of employees (change in employment level) of the individual establish-ments. It is thus an altogether new kind of empirical data set for analyzing the functioning of the labour market, including employment growth, the structure of the workforce, and the turnover, as well as other forms of mobility of the workforce. The particular feature here is the inclusion of information based on individual establishments. 3. Statistical Concepts and Interpretations The statistical concept of the turnover of employees constitutes a measure of stability of employment through a period of time, i.e. from one point in time to another a year later. Thus, it is not a measure of the continuous flow of turnover regarding employees. Brief spells of employment, starting and ending within the two points in time, are not included. The measure of the number of separations which may here be constituted corresponds with the measure generally known as an instability rate (cf. Price 1977). Here, we shall apply the terms separation rate and accession rate, respectively, thus measuring the replacement of the stock of the workforce which takes place between the two points in time: It should be pointed out that the separation rate indicates the total extent of separations from the establishments, both voluntary (quits), and involuntary (dismissals or lay-offs). With the data being register-based, there is no informa-tion about the type of separation. Not being able to assess the extent of involuntary separation may seem a serious problem in relation to the main issue of this chapter. In particular, it means that there is no direct measure of disparities of risk of dismissal, but only a measure of the overall separation frequencies.

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  Advances in Management Accounting

  • Marc J. Epstein, Mary A. Malina, Marc J. Epstein, Mary A. Malina(Authors)
  • 2016(Publication Date)
  • Emerald Group Publishing Limited

    (Publisher)

  Moreover, turnover can be viewed as a fundamental management control issue as evidenced by its frequent inclusion in balanced scorecard models. Turnover undermines control over operations by redirecting resources away from the provision of goods and services to controlling membership ( Price, 1977 ). Examining turnover in unskilled service jobs enables us to investigate turn-over’s effects on organizational control over service provision. Hospitality service chains evolve around branded and standardized offerings to custo-mers, making consistent employee performance an essential element of business strategy ( Lashley, 2001 ). Strong organizational control over service provision is necessary for firms to replicate their offerings in geographically-dispersed outlets. Our study makes several important contributions. First, we adopt the view that turnover can yield benefits; firms must find a balance between the benefits and costs of turnover ( Abelson & Baysinger, 1984 ; Glebbeek & Bax, 2004 ; Staw,1980 ). To this end, we investigate the detrimental and beneficial outcomes associated with turnover by isolating its effects on revenues and costs, which, in turn, determine profit. Most large-scale empirical studies examine proximal performance measures (customer outcomes and produc-tivity) that capture only the negative aspects of turnover. In particular, higher turnover rates have been associated with inferior service quality ( Kacmar et al., 2006 ; Subramony & Holtom, 2012 ; Ton & Huckman, 2008 ), lower sales ( Shaw, Duffy, Johnson, & Lockhart, 2005 ; Siebert & Zubanov, 2009 ), higher accident rates ( Shaw et al., 2005 ), and lower efficiency 37 Turnover and Unit-Level Financial Performance ( Kacmar et al., 2006 ; Shaw et al., 2005 ). Few studies recognize that new employees are paid lower wages and receive fewer benefits than longer-tenured employees ( Glebbeek & Bax, 2004 ; Shaw et al., 2005 ).

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  Employee—Organization Linkages

  The Psychology of Commitment, Absenteeism, and Turnover

  • Richard T. Mowday, Lyman W. Porter, Richard M. Steers, Peter Warr(Authors)
  • 2013(Publication Date)
  • Academic Press

    (Publisher)

  Turnover is also somewhat higher in the western region of the United States. A second way to appreciate the extent and diversity of the problem is to consider longevity or tenure rates of employees in various industries. These data are shown in Table 5.1, which indicates median years on the job for employees in various occupations and industries. Again, it becomes readily apparent that certain sectors of the economy (e.g., railroads, agriculture, postal service) have significantly lower turnover rates on the average than other sectors (e.g., wholesale and retail trade, entertainment and recreation, construction, medical and health services). The implica-tions of such findings for organizational effectiveness and managerial action will be discussed in the next chapter as we consider the conse-quences of turnover. 1975 1976 1977 1978 J F M A M J J A S O N D J F M A M J J A S O N D 1978 1979 Figure 5.1. Median turnover rates: all companies (job absence and turnover: 1979, Bureau of National Affairs, 1980). Measuring Employee Turnover 109 Q. Ε All companies Up to 250 250-499 500-999 1000-2499 ^ ^ ^ 1 . 7 2500 and more Manufacturing ^/QV/////^^ -6 Nonmanufacturing ο en a> CC Finance Nonbusiness Health care Northeast South North Central ^ West 1.9% 2.2 2.2 1.9 1.3 2.0 2.5 2.1 2.2 1.6 1.8 1.8 2.4 _J I I I I— -I I I I I 1.0 2.0 3.0 Percentage of average work force Figure 5.2. Average monthly turnover rates; 1979 (job absence and turnover: 1979, Bureau of National Affairs, 1980). Measuring Employee Turnover As with employee absenteeism, there exist various methods for calcu-lating employee turnover rates. The most comprehensive description of these methods can be found in Price (1977). He identifies seven general methods: 1. Average length of service—sum of the length of service for each member divided by the number of members 2. Accession rate—number of new members added during the period divided by the average number of members during the period 3.

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  Globalisation and Labour Market Adjustment

  • D. Greenaway, R. Upward, P. Wright, D. Greenaway, R. Upward, P. Wright(Authors)
  • 2008(Publication Date)
  • Palgrave Macmillan

    (Publisher)

  To us, it is simply not enough to dismiss such con- cerns as misguided without first investigating them using an appropriate framework. Along the way, our research has occasionally generated some unex- pected results, one of which is that differences in equilibrium turnover rates across industries and across countries can cause trade. The argu- ment is really rather simple, and, in retrospect, perhaps we should have never been surprised by this finding. To understand the link, imagine a model in which it takes time and effort for unemployed workers and firms with vacancies to meet and establish a relationship. The time it takes to establish such a relationship depends upon a variety of factors including, but not limited to, the nature of the production process (its complexity and the skill mix of labour required), the nature of the search process (in terms of the matching function and the amount of infor- mation available), the composition of the labour force in the region, and the degree of competition in the local labour market. It is easy to imagine that vacancies in some industries, where jobs require no particu- lar skills or experience, might be quite easy to fill. In contrast, vacancies in other industries with complex production processes might be diffi- cult to fill because the matching process is harder to solve. Firms in the latter industries might hire and fire several workers before finally find- ing an employee that fits their particular needs. Finally, to complete our description of the setting we have in mind, assume that even once the firm and worker establish a relationship, the length of the subsequent Globalisation and Turnover 19 employment relationship is uncertain (this could be due to, say, random fluctuations in demand). In such a model, workers cycle between periods of employment and unemployment and may very well face non-trivial spells of unemploy- ment after losing a job.

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  Optimizing Human Capital with a Strategic Project Office

  Select, Train, Measure,and Reward People for Organization Success

  • J. Kent Crawford, Jeannette Cabanis-Brewin(Authors)
  • 2005(Publication Date)
  • Auerbach Publications

    (Publisher)

  28 As these responses indicate, management involvement makes a differ-ence. Kepner-Tregoe interviewed ten “retention leaders” — companies with successful track records in holding on to talent — to find out what The Turnover Solution 119 works. The result was a list of “key drivers of retention success” that included: Balance a culture of caring with a tradition of excellence. Resolve conflict with a “stair-stepping process” that allows employ-ees to bypass their immediate supervisor. Take stock of the turnover rate, then take action. Focus on the star performers. View people management as a strategic business issue. Pursue improvement relentlessly. 29 Probably the best place to start paying attention to retention is to find out why people leave their jobs in your organization. Some of the top reasons across all industries include lack of job satisfaction, lack of challenge and interest in the work, dissatisfaction with their leadership or with the organization’s image and overall position, and incompatibility with the work group. 30 Professional employees have additional reasons to add, such as lack of talent development, apparent lack of trust by supervisors, lack of genuine involvement, perceived lack of objectivity and fairness in the organization, higher management’s disregard of or disinterest in human relations, and disproportionately low compensation. Most important, according to the Society for Human Resource Man-agement (SHRM), is to remember that retention comes from building emotional bonds between the workers and the employer. These emotional bonds are strengthened when managers pay attention to issues that are important to their employees. Orientation Day one is a good time to start building those emotional bonds. For an employee to get off on the right foot and feel comfortable in his or her job, a thorough orientation must be conducted. New employees who feel lost, ignored, or inadequately prepared tend to bail out quickly.

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  Managing Impressions with Information Technology

  • Jon W. Beard(Author)
  • 2004(Publication Date)
  • Praeger

    (Publisher)

  Ultimately, ousting from appealing opportunities may lead mid-career employees to look for outside job opportunities that would involve more interesting and challenging work assignments, or to look for non-IT career opportunities (Lee, Ang, & Slaughter, 1997). Further, depending on how they are managed, a turnover culture may develop among the newly-hired college grads. Matloff (1998) claims that a desire for low cost labor is at the heart of managing IT human resources, and college graduates are an economical source of labor. Matloff boldly notes that recent graduates are typically single, and therefore it is often assumed that they can work large amounts of overtime without being loaded down by non-work obligations. Such an IT human resource management strategy is enacted by running young employees at full steam over a short period of time, and then replacing them. Yet consistently overloading IT staff with work at any stage of their career is likely to foster a high turnover culture in IT workgroups. Moore (2000) provided evidence that IT professionals experiencing work exhaustion reported significantly higher intentions to leave the job, and that work overload was the strongest contributor to exhaustion for these workers. If work overload and exhaustion are common within a workgroup, IT professionals are likely to have seen others experience the problem and successfully deal with it by leaving. Accordingly, work overload and exhaustion can contribute to a high turnover culture in IT workgroups. Turnover Culture 65 RESEARCH IMPLICATIONS Several implications for research can be drawn from this piece. At the outset, we should reiterate the importance of incorporating turnover culture in research aimed at predicting and understanding turnover. Focusing solely on individual-level variables (as has most traditional turnover research) produces a much too confined view of the turnover picture (Abelson, 1993).

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