2.1 HRM – Workforce Planning: Measurement of Labour Turnover
What is Labour Turnover?
Labour turnover is the rate at which employees leave a company and are replaced by new hires. Think of it like a revolving door at a busy café: customers (employees) come in, leave, and new ones come in. 📊
Why Measure Turnover?
- High turnover can mean high recruitment costs.
- It may indicate problems with job satisfaction or working conditions.
- Low turnover often signals a healthy workplace.
Turnover Rate Formula
The basic formula is:
| Formula | Explanation |
|---|
| \$ \displaystyle \text{Turnover Rate} = \frac{\text{Number of Employees Who Left}}{\text{Average Number of Employees}} \times 100\% \$ | Count how many left during a period, divide by the average staff count, then multiply by 100 to get a percentage. |
Example Calculation
Suppose a school has an average of 50 teachers. During the year, 5 teachers leave.
| Value | Result |
|---|
| Number of employees who left | 5 |
| Average number of employees | 50 |
| Turnover Rate | \$ \displaystyle \frac{5}{50} \times 100\% = 10\% \$ |
Types of Turnover
- Voluntary: Employees leave by choice (e.g., better offers elsewhere).
- Involuntary: Employees are dismissed or laid off.
- Functional: Replacements bring new skills or higher performance.
- Disfunctional: Replacements are less effective or costly.
Interpreting Turnover Rates
🔍 A high rate (e.g., >15%) may signal problems. A low rate (e.g., <5%) usually indicates good engagement. Compare with industry benchmarks for context.
Strategies to Reduce Turnover
- Offer competitive salaries and benefits.
- Provide clear career pathways.
- Foster a positive workplace culture.
- Implement mentorship and training programmes.
- Use employee feedback to make improvements.
Exam Tips 📚
- Remember the formula: Turnover Rate = (Employees Who Left ÷ Average Employees) × 100%.
- When given numbers, always check if you need to use the average or the starting count.
- Use real-world examples (e.g., a sports team’s player changes) to illustrate concepts.
- Explain the difference between voluntary and involuntary turnover.
- Highlight the importance of comparing rates to industry standards.