Everything you need to know about the causes for labour turnover. Labour turnover is a natural phenomenon occurring because of social and economic causes.
However, while analysing these causes, it is necessary to distinguish between normal labour turnover and excessive labour turnover.
The logic behind such a classification is the problem to be faced by the management due to excessive labour turnover, and also its impact on production and costs.
Labour turnover is the rate of change in the labour force of a concern during a specified period of time. In every organisation some workers leave and new ones are recruited causing labour turnover.
However, if a department closes down and workers are retrenched, it will not be a case of labour turnover.
The different causes of labour turnover are:- 1. Avoidable or Controllable Causes 2. Unavoidable or Uncontrollable Causes and 3. Personal Causes.
Also, learn about the various factors that lead to labour turnover:- 1. Labour Specific Factors and 2. Organization Related Factors.
Causes of Labour Turnover – Causes and Effects of Labour Turnover
Labour turnover is a natural phenomenon occurring because of social and economic causes. However, while analysing these causes, it is necessary to distinguish between normal labour turnover and excessive labour turnover. The logic behind such a classification is the problem to be faced by the management due to excessive labour turnover, and also its impact on production and costs.
The social and economic causes of labour turnover may also be analysed into avoidable or controllable causes and unavoidable or uncontrollable causes. Normal labour turnover is usually unavoidable. It occurs not merely at the firm level but industry level also. In fact, such defection is advantageous from the point of view of both the firm and industry. Besides injecting fresh blood into the firm, it helps the firm adjust its labour force according to the workload.
At the industry level, it brings about uniformity in the methods and techniques of production. It thus paves the way of overall labour efficiency. As such, normal turnover, which is between 3% to 5%, need not cause much anxiety to the employer.
Excessive labour turnover, however, becomes a problem serious enough to management to attract immediate attention for measures to be taken to minimise the same.
1. Avoidable Causes:
a. Job dissatisfaction;
b. Low remuneration;
c. Bad working conditions;
d. Lack of job security;
e. Lack of retirement benefits;
f. Lack of promotional opportunities;
g. Bad treatment by the bosses;
h. Strained relations with supervisors;
i. Lack of welfare measures;
j. Redundancy due to seasonal character of trade, shortage of materials, completion of projects, and faulty planning and control techniques;
k. Bad relationship with colleagues; and
I. Lack of training facilities.
2. Unavoidable Causes:
a. Personal betterment;
b. Death, retirement and disablement;
c. Domestic responsibilities;
d. Marriage and pregnancy in the case of female workers;
e. Shifting to another locality or city;
f. Illness and accident; and
g. Discharge on disciplinary grounds.
Effects of Labour Turnover:
Excessive labour turnover results in loss of output, higher costs and lowering of morale due to the following reasons:
a. Frequent changes in labour force causes disturbance in the continuous flow of production. The result is low production.
b. Cost of production gets inflated owing to efficiency of new employees being lower.
c. Cost of selection and training and length of time taken to train new employees increase cost of production.
d. Loss of output on account of reduced effort put forth by employees for the period immediately prior to their leaving, and
e. Cost of production increases because of rejects, defective work, improper handling of tools or equipment and loss of time due to accidents in the case of new employees.
The main causes for labour turnover in a business enterprise can be broadly classified into the following:
i. Personal Causes:
These are the causes which induce or compel workers to leave their jobs, like:
(1) Change of jobs for betterment
(2) Premature retirement due to ill health or old age
(3) Domestic problems and family responsibilities
(4) Discontent over the job and working environment
These are the causes for which it becomes obligatory on the part of management to ask for one or more of their employees to leave the organisation, like:
(1) Seasonal nature of business
(2) Shortage of raw material, power, slack market for the product, etc.
(3) Changing plant location
(4) Disability, making the worker unfit for work
(5) Disciplinary measures, etc.
These are the causes which require the attention of management on a continuous basis so as to keep the labour turnover as low as possible, like:
(1) Dissatisfaction with job, remuneration, hours of work, working conditions, etc.
(2) Strained relationship with management, supervisors or fellow workers
(3) Lack of training facilities and promotional avenues
(4) Lack of recreational and medical facilities
(5) Low wages and allowances
1) Instability of workforce and ultimately in employment.
2) It increases hiring cost of employees for again and again recruitment, selection, placement and training etc.
3) Accident rates of new employees are often higher.
4) It reduces the efficiency of the employees due to frequent leaving and joining the companies.
5) Poor quantity and quality of production
6) Workers deprived of various advantages of continued employment such as opportunities of graded pay, provident fund and leave and pension etc.
7) No attachment, sense of belonging, oneness togetherness, loyalty, honesty towards the company among the workers.
8) More wastage of raw material, and poor time management by the new employees.
9) Higher cost of production.
10) Inadequate/partial utilization of human and non-human resources.
11) Increases the problems of employment.
12) It makes the organization weak.
In fact higher rate of labour turnover is a greater handicap for workers and industry.
Causes of Labour Turnover – Factors that Causes Labour Turnover
Labour turnover is caused, by a variety of factors.
1. Labour Specific Factors:
i. Job hopping tendency among individuals during the initial stage of their career.
ii. Too much ambition among individuals leads to a state of never being satisfied.
iii. Dissatisfaction with the present job and current employer.
iv. Better job prospects across sectors.
vi. Home sickness.
vii. Low pay.
viii. Tendency to start one’s own venture.
ix. Inability to undertake tour and long travel.
x. Domestic responsibilities in case of women employees i.e., childcare, elder care, etc.
xi. Absence of family support.
2. Organization Related Factors:
i. Incongruent organizational culture resulting in conflict between the individual and the organization.
ii. Poor pay, pay cut and penalties for underperformance.
iii. Lack of promotional opportunities.
iv. Strained superior-subordinate relationship.
v. Poor interpersonal relationship due to jealousy and uncooperative attitude of colleagues.
vi. Lack of job security.
vii. Lack of social security benefits like pension, gratuity, insurances, etc.
viii. Lack of incentives.
ix. Absence of adequate motivational schemes.
x. Lower pay.
xi. Poor working conditions.
xii. Poor leadership and supervision.
xiii. Fixing unrealistic targets resulting in frustration.
xiv. Defective communication system.
xv. Inadequate welfare measures.
xvi. Monotonous job or lack of challenging jobs.
xvii. Lack of career counselling.
xviii. Dissatisfaction from non-redressal of grievances.
xix. Biased performance evaluation.
xx. Lack of support from management for employees learning and for pursuing higher education.
xxi. Absence of training or inadequate training and development facilities.
xxii. Too much centralization of authority and lack of autonomy on the part of workers.
xxiii. Dangerous occupation.
xxiv. Recurrence of industrial accidents and absence of safety mechanism.
xxv. Need to do unethical work practice.
xxvi. Heavy workload and compulsory night shift.
xxvii. Workplace harassment.
Causes of Labour Turnover
A. Avoidable Causes:
1. Dissatisfaction with the remuneration or low wage rates
2. Lack of proper training facilities
3. Lack of safety measures
4. Lack of job security
5. Lack of incentives
6. Injustice or favoritism in transfers and promotions.
7. Lack of good industrial relationships.
8. Bias or Unsympathetic attitudes of management.
9. Inadequate retirement benefits
10. Faulty selection of people
11. More employee grievances
12. Poor working conditions
B. Unavoidable Causes:
1. Death of a person
2. Retirement of employees
3. Dissatisfaction with the job
4. Personal or Domestic responsibilities of the employees
5. Incase of female employees, marriage, pregnancy etc.
6. Conviction of the workers in criminal cases.
7. Immoral characters of the workers
8. Change of service for the personal betterment of the employees.
9. Permanent disability due to accident or illness
10. Personal betterment with regard to new job.
11. Change in nature of business and plant location.
Measures to be Taken to Control the Labour Turnover:
1. The following steps are to be taken for the purpose of minimising the labour turnover.
2. Adequate and satisfactory wage system.
3. Proper method of selection of workers should be adopted.
4. Providing the required and adequate training facility to the workers.
5. Incentives wage schemes should be introduced.
6. The hours of work should be reasonable.
7. Providing welfare services like legal facilities subsidised canteen facilities, recreational facilities etc., to the works.
8. Providing retirement benefits to the employees like gratuity, Provident fund, Pension scheme etc., assuring the job security to the workers.
The causes of labour turnover may be divided into two categories:
i. Avoidable or controllable causes
ii. Unavoidable or uncontrollable causes.
i. Avoidable or Controllable Causes:
(a) Dissatisfaction with remuneration – Low wages may force workers to look for higher wages elsewhere.
(b) Dissatisfaction with job-
(i) Bad working conditions
(ii) Dissatisfaction with working hours.
(iii) Unhappy relationship with supervisors.
(iv) Bad relationship with fellow workers
Lack of proper facilities, such as health care, accommodation, transport, education of children, social amenities, etc.
ii. Unavoidable or Uncontrollable Causes:
(i) Personal betterment.
(ii) Domestic responsibilities.
(a) Illness or accident.
(b) Move from locality.
(c) Dismissal or discharge due to insubordination, negligence, inefficiency, etc.
(e) Retirement and/or death.
(f) National service.
(g) Redundancy – The seasonal nature of trade/industry, shortage or non-availability of essential inputs etc., may force laying off of workers.
Causes of Labour Turnover
The various causes of labour turnover within a concern can be subdivided under two main headings:
(1) Avoidable causes.
(2) Unavoidable causes.
(1) Avoidable Causes:
a. Redundancy—This could arise from the seasonal nature of the trade, shortage of imported raw materials, policy of the government, lack of planning and foresight of higher management, technological unemployment, etc.
b. Low wages may compel workers to look for higher wages elsewhere.
c. Job may be dissatisfying.
d. Bad working conditions, e.g. bad environment, inadequate ventilation and sanitation.
e. Bad relationship with fellow workers.
f. Relationship with supervisors—Unsympathetic and non- cooperative attitude of the supervisors and/or management may force the workers to leave.
g. Dissatisfaction with hours of work.
h. Lack of proper recreational facilities and other benefits.
(2) Unavoidable Causes:
a. Personal betterment.
b. Domestic responsibilities.
c. Illness or accident.
d. Dismissal or discharge due to insubordination, negligence, in efficiency, etc.
f. National service.
g. Retirement, death, etc.
h. Housing difficulties, transport difficulties, etc.
Effects of Labour Turnover:
A high turnover has an adverse effect on the cost of production due to the following reasons:
1. Frequent changes in the labour force interrupts production and the production goes down.
2. New workers take time to become efficient. Selection and training costs of new workers also increase. They may turn out defective products initially. Being inexperienced, they may use materials extravagantly and cause more depreciation of tools and machinery. They are more prone to accidents.
Labour turnover is the rate of change in the labour force of a concern during a specified period of time. In every organisation some workers leave and new ones are recruited causing labour turnover. However, if a department closes down and workers are retrenched, it will not be a case of labour turnover.
1. Personal Causes:
These are the causes which are based on personal reasons and force the workers to leave Jobs.
(a) Change of job for betterment.
(b) In case of female workers domestic troubles and family responsibilities.
(c) Death by Nature or disease.
(d) Dissatisfaction on the job and working conditions.
(e) Premature retirement due to illness.
2. Unavoidable Causes:
These are the causes which are not within the control of the management and force some workers to leave the organization.
(a) Seasonal nature of product
(b) Due to inefficiency or unfit work.
(c) Marriage in case of female workers.
(d) Decrease in market demand of the product.
(e) Due to shortage of work, shortage of raw material, power, etc.
3. Avoidable Causes:
These causes are within the control of the management and thus are paid due attention by management. Labour turnover ratio can be improved by considering these causes.
(a) Dissatisfaction of workers and working conditions.
(b) Mutual relationship.
(c) Lack of promotional and motivational measures.
(d) Medical facilities.
(e) Lack of Job Security.
(f) Timings of Job i.e., long hours.
(g) Low wages and other allowances.
Labourers sometimes leave the firm or industry at their own instance and occasionally they are ousted from the firm or industry. New workers are employed in their places and thus the composition of labour force changes from time to time. Labour turnover is the rate of displacement of the personnel employed in an organisation due to resignation, retirement or retrenchment. If the rate of labour turnover is more, this is a sign of instability of labour and it adversely affects their efficiency as well as the profitability of the firm.
Experienced workers go out of the firm and new and inexperienced workers come in who are to be trained. The work suffers thereby and the cost of labour increases. Therefore, the labour turnover proves to be very costly for the business and every effort should be made to reduce the frequency of labour turnover.
Factors responsible for the labour turnover may be put as follows:
1. Unavoidable Factors:
These include factors which are not within the control of the management:
(i) Personal betterment.
(ii) Illness or accident.
(iii) Death or retirement.
(iv) Discharged due to insubordination etc.
(v) Marriage particularly in case of women workers.
(vi) Seasonal nature of business.
(vii) Shortage of raw materials, power resulting in lowering production capacity.
(viii) Location change.
2. Avoidable Factors:
The factors are within the control of the management. The management should therefore try to reduce their impact to the minimum by appropriate preventive measures.
(i) Lack of congenial and healthy atmosphere in the factory.
(ii) Lack of proper facilities and amenities.
(iii) Low wages, ill treatment etc.
(iv) Redundancy, i.e., lack of planning and foresight of higher management.
(v) Relationship with fellow workers etc.
Causes of Labour Turnover – What are the Causes of Labour Turnover?
It often happens that some of the employees leave the organisation during the accounting period. There may be various reasons for leaving the organisation but the personnel manager must take necessary steps to find out the root cause. Every organisation should prepare monthly labour turnover report.
The report should focus on the root causes of labour turnover, distinguishing the avoidable from the unavoidable. It also analyses whether employees are leaving for dissatisfaction or are being dismissed because of bad selection. The personnel manager should compile data of different departments and compare it with the previous data.
Some labour turnover is good for the organisation because unsuitable employees should not be continued for a long time. Majority of the companies try to keep good employees by offering different incentives.
Causes of labour turnover can be classified into three categories:
(i) Unavoidable causes;
(ii) Avoidable causes; and
(iii) Personal causes.
(i) Unavoidable Causes:
Unavoidable causes are those which are beyond the control of the management.
Some of the unavoidable causes are:
(a) Change in the plant location. For example, Tata Motors Ltd shifted their Nano car plant from Singur in West Bengal to Sanand in Gujarat in 2008.
(b) Disciplinary measures. For example, Maruti has terminated the service of 2000+ employees in their Manesar Plant at Hariyana in 2012 for rioting inside the plant.
(c) Lack of demand for the product because of change in customers’ taste and technology.
(d) Non-availability of raw materials. For example, many sugar mills in UP and Bihar have suspended their normal operations for non-availability of sugar cane.
(e) Government / Court Order restricting the operation in certain areas. For example, mining activities in certain tribal areas of Odisha has been suspended by the Supreme Court.
(ii) Avoidable Causes:
Avoidable causes are those which the management can address in time.
Some of the avoidable causes are:
(a) Low remuneration and lack of other facilities
(b) Long working hours
(c) Working under constant pressure
(d) Unsuitable working hours. For example, 6 pm to 2 am. (It is very common practice in IT Industry).
(e) Unsuitable working conditions.
(f) Bad work culture of the organisation. For example, a particular caste or religion is given preference in promotion, pay, etc.
(g) Lack of medical and recreational facilities.
(h) Lack of appreciation of good employees by the management.
(i) Unfair evaluation of employees for promotion, benefits, etc.
(j) Lack of training facilities and career advancement.
(iii) Personal Causes:
Personal causes are those which compel the employees to leave the organisation.
Some of the personal causes are as follows:
(a) Better job opportunity with higher pay and designation.
(b) Children’s education.
(c) Family obligation (e.g., looking after old parents)
(d) Marriage of female employees.
(e) Health problem leading to pre-mature retirement.
(f) Bad and in-human behaviour of the higher authority.
(g) Lack of job security.
(h) Preference of Government job over private job, etc.
Effects of Labour Turnover on Cost of Production:
Apart from direct costs of recruitment such as – advertising in newspaper, agency fees, holding of examination, interview and so on, there are some ‘indirect costs’ or ‘hidden costs’ which are not always recognised. For example, training and education of employees may be very costly. In many organisations, employees are given a training course which may last for any duration from a week to several months.
The cost of training, salary and other benefits during training period are huge. The newly appointed employee may not work efficiently right in the beginning, wastage or scrap may be more and some cost involvement will be there.
It is a regular feature in every organisation that some workers change or are made to change their employment. The rate at which such a change takes place is known as ‘labour turnover’. Labour turnover may be defined as the rate of workers left or discharged during a given period to the average number of workers employed in the organisation during that period.
The main causes of Labour Turnover can be divided into two categories:
1. Avoidable Causes.
2. Unavoidable Causes.
1. Avoidable Causes:
These include –
(a) Low Wages
(b) Dissatisfaction with the job.
(c) Unsatisfactory working conditions.
(d) Inadequate medical facilities.
(e) Lack of recreational facilities.
(f) Lack of training facilities,
(g) Dissatisfaction with working hours.
(h) Unfair methods of promotion.
(i) Unsympathetic attitude of supervisory staff and management.
These are –
(a) Personal betterment.
(b) Illness or accident.
(c) Retirement or death.
(d) Dismissal due to incompetency or inefficiency.
(e) Dismissal due to unauthorised long absence.
(f) Domestic responsibilities in case of female workers e.g., marriage, pregnancy, etc.