Turnover means “change”. A change in the financial status of an organization is called “the financial turnover”. A change in the number of employees of an organization is called “The labor turnover”. Labor turnover is a major problem of economies across globe. Any kind of increase or decrease in the manpower is known as “labor turnover”. Good organizations prepare a regular report of employees joining or leaving the organization in a week or month. Both attrition and recruitment of employees contribute towards labor turnover.
An employee leaves an organization for various reasons. Some of the avoidable reasons are low job satisfaction, low pay, risky or monotonous work, low scope for development etc. Some of the unavoidable reasons are death, retirement, accident, poor health etc.
Some reasons of increase in number of employees are merger, acquisition, expansion, diversification, replacement of an employee, changes in laws or technology, increase in production facilities etc.
Whenever an employee leaves or joins an organization it undergoes a phase of low productivity. Additional expenses are incurred on recruitment of new employee like for advertising of job, time taken for interviews etc. Moreover, the new employee has to be trained for job accordingly. Hence both money and time are wasted in training process. Replacement of an employee creates insecurity among others.
Every good organization prepares a report of labor turnover to refer and rectify the avoidable causes of turnover. Below are methods used to estimate turnover:
Average No. = (No. of employees at start + No. of employees at end) / 2
• Separation Method/Rate:
(Number of employees separated in a period / Average number of employees in the period ) * 100
• Replacement Method/Rate:
(Number of employees replaced in a period / Average number of employees in the period) * 100
• Flux Method/ Rate:
{(No. of employees separated + No. of employees replaced) / Average number of employees in the period } * 100
