Labour turnover is defined as the ratio of number of employees who leave the organization which can be due to any reason like resignation, termination of service etc. to the total number of employees on payroll that year. It is also called staffing turnover. It is a parameter that is used to measure e retention of employees. Each country has its own value of labour turnover, UK for instance has 13.5%. The reasons can be as following – 1. Resignation 2. Retirement 3. Not suitable for the job 4. Change in demand that leads to change in workforce 5. Change in business strategy which can be location change or capacity change. Labour turnover also varies from industry to industry as well as region wise. There are four types of turnovers
1. Voluntary-This type of turnover happens when an employee leaves the organization on his own. It might include resignation, retirement, voluntarily giving up of service
2. Involuntary-In this type of turnovers, the employees are terminated from their services which can be due to misconduct on their part.
3. Functional –This is to enhance the performance of the company where low performing employees are sent off from the company
4. Dysfunctional-This is just the opposite of the functional turnover. Here employees who are good performing leave the organization, this leaves the organization in a bad shape and the organization should try its best to stop it from happening.
So companies should try to offer benefits like health care, medical facilities, good leaves, good culture and job opportunities to keep their employees engaged.
Turnovers are also internal and external. Internal turnovers happen when employees leave one position and go to another like job transfers or internal department change. External turnovers on the other hand happen when the employee leaves the organization and joins some other one.
Hence, this concludes the definition of Labour Turnover along with its overview.
This article has been researched & authored by the Business Concepts Team. It has been reviewed & published by the MBA Skool Team. The content on MBA Skool has been created for educational & academic purpose only.
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