Demerits of Employee turnover:
Demerits of employee turnover is the ratio of workers who are either replaced or have left the company.
Its measurement is done to help examine the causes of employee turnover along with estimation of cost to analyze budget through the following formula:
Categories of Employee Turnover:
There are two different categories of Employee turnover stated as follows:
Voluntary Employee Turnover is when a worker leaves an organization with his own willingness.
Involuntary Employee Turnover occurs when an employee is terminated temporarily or permanently, depending upon the situation of the organization.
Cost of employee turnover:
The demerit of turning over a particular position in the organization that includes hiring , training and other fringe benefits that the firm provides.
Corporations such as Costco have a belief that low employee turnover is beneficial as compared to high.
Turnover can be costly and inconvenient for a firm as discussed below:
- Overall performance: Workers having little experience have to provide higher value solutions and optimized services which affects the performance of the organization.
- Employee Morale: High labor turnover can negatively impact effectiveness and efficiency as poor morale results in a domino effect i.e. affect all the employees working.
- Replacement and Opportunity Cost: These include both, direct and indirect costs. Direct costs are those costs that can be tied directly to the production of certain commodities or services for example piece rate wages and cost of material whereas on the other hand. Indirect costs include depreciation and other performance measures that do not directly effect.
- Quality: The quality of performance is hindered as companies struggle to achieve their daily objectives.
- Career advancement: If an employee is forced to leave the organization, his career can be affected and might not be able to develop it. Furthermore, the world is changing frequently and it is not easy to start over and cope up with new technology.
Causes of Employee Turnover:
Employee turnover can be either high or low depending upon the company’s current health and several key indicators:
- Employee Redundancy: When an organization is downsizing, they may dismiss an employee until his services are needed.
- Job dissatisfaction: Lack of job satisfaction can increase employee turnover as when an employee is underpaid, he would look for a better opportunity and leave the respective firm. In addition, if there is no to little career growth and new challenges, that can cause dissatisfaction. If the manager is unsupportive or rude, it can disrupt the work environment and an employee would lose his interest.
- Poor Team Dynamics: Lack of team working skills can cause difficulties as working with your subordinates can help make innovative and creative decisions. Also, employees feel comfortable to talk to their subordinates rather than the manager but if there is poor management than it can affect the team dynamics.
How to prevent Labor Turnover:
- Increase employee satisfaction by brainstorming with him on a weekly basis and set time for employees to collaborate and interact with other individuals in the workplace.
- Job security and commitment from the organization can lower employee turnover.
- Involving employees in the decision-making process by opting for a democratic leadership style motivate employee as they feel important.
- Employee engagement can help identify the high-risk factors and help managers know the reasons to make amendments. So, feedback can do wonders and reduce turnover.
Employee Turnover can badly ruin an organization’s reputation if the rate increases hence, proper measures should be taken to overcome the factors that cause them.