Test: Labour Turnover - B Com MCQ

Labour turnover refers to the change in the composition of the labour force in an organisation. It is the ratio of the number of persons leaving in a period to the average number employed. It can be measured by relating the engagements and losses in the labour force to the total number employed at the beginning of the period.

A high labour turnover indicates a lack of flexibility in the organization. It may suggest that the organization is not able to retain its employees due to various reasons such as dissatisfaction with job conditions, remuneration, and working environment. This could lead to increased costs and reduced productivity.

Personal causes of labour turnover are those which induce or compel workers to leave their jobs. These causes include change of jobs for betterment, premature retirement due to ill health or old age, domestic problems and family responsibilities, and discontentment over the jobs and working environment.

Examples of replacement costs of labour turnover are costs incurred for recruiting and training labour and the loss arising due to wastages and reduced productivity of the new labour force. These costs include a decline in output due to the inexperience of new workers, decline in quality due to the lack of experience of new workmen, loss of output during the time lost while recruiting new workers, cost of recruitment/selection, cost of training, cost of tool, equipment, and machine breakages, waste, scrap, and defectives arising due to the lack of experience of new workers, and cost of accidents, compensation paid, damage to property, assets, etc.

Unavoidable causes of labour turnover are those under which it becomes obligatory on the part of management to ask some or more of their employees to leave the organization. These causes include the seasonal nature of the business, shortage of raw materials, power, slack market for the product, change in the plant location, disability making a worker unfit for work, disciplinary measures, and marriage (generally in the case of women).

Examples of preventive costs of labour turnover are costs incurred to keep the workers satisfied and discourage them from leaving the concern. These costs include costs of providing medical services, personnel administration costs, costs of labour welfare activities, and costs incurred for providing pension, provident fund, and retirement schemes.

Avoidable causes of labour turnover are those which require the attention of management on a continuous basis to keep the labour turnover ratio as low as possible. These causes include dissatisfaction with job conditions, remuneration, hours of work, working conditions, strained relationship with management, lack of training facilities and promotional avenues, lack of recreational and medical facilities, and low wages and allowances.

Labour turnover increases the cost of production due to various reasons. It increases the cost of selecting/replacing workers, the cost of training imparted to new workers, and results in production loss due to improper execution of production planning. Additionally, it can also lead to losses due to defectives and wastage, mishandling of tools and equipment, and breakages.

An effective step to minimize labour turnover is implementing a scientific system of recruitment, placement, and promotion for employees. This helps in ensuring that the right individuals are selected for the job, placed in suitable positions, and provided with opportunities for growth and advancement. It can enhance job satisfaction and reduce the likelihood of employees leaving the organization.

Preventive costs of labour turnover should be treated as overhead expenses and apportioned to departments based on the number of persons employed in each department. Replacement costs may arise either due to faults of departments or faulty management policy. In the case of faults of departments, the cost is charged as overhead to the concerned department. In the case of faulty management policy, the overhead cost is apportioned to different departments based on the number of persons employed in each department.