Industrial Relations Management

Assignment # 01
Reviewed and submitted by: Mansoor Ali Seelro (BBA VIII)


Turnover defined:

Turnover is the number or percentage of employees who voluntarily or involuntarily leave
your employment in comparison with the number or percentage of employees who stay in
your employment over a certain period of time, generally a calendar year. Your turnover
ratio is a useful measurement, a finger on the pulse of employee within your organization.
Turnover is also a testimony to how effectively the recruitment process you employ is
functioning. Turnover rates give you insight into how well your managers are interacting
with employees. Turnover is a window into your organizational, the environment you
provide for employees in your workplace.

High employee turnover can have a severe impact on your business, both financially and
emotionally. If you suspect that turnover is an issue for your business, you should take
steps to recognize possible causes of turnover, measure your turnover rate, determine
turnover costs, and then address your turnover problems.

A high employee turnover rate, the rate at which employees leave a business, can affect the
bottom line of businesses of all sizes. However, the negative effect on small businesses can
be particularly harsh due to limited resources and the investment in employees. ecause
employees who are satisfied with their !obs generally don"t give them up, high turnover is
usually indicative of a problem.
That"s not to say that every employee who leaves your company is unsatisfied # after all,
some will retire, leave town, $uit because of family circumstances, desire to change
professions, or even start a business of their own. ut if you have a lot of turnover and
you"re losing good employees, you may want to give some thought to the possibility that
the cause of high employee turnover in your business is a morale problem.

Causes of High Turnover:
The causes of turnover are related to the same factors that contribute to absenteeism # if
workers are not interested in their !obs, they will either stay away or leave. ut being
unhappy in a !ob is not the only reason why people leave one employer for another. If the
skills that they possess are in demand, they may be lured away by higher pay, better
benefits, or better !ob growth potential. %hile you can"t control what"s happening with other
companies, how much they pay, or which benefits they offer, you can take steps to improve
morale at your business and make those employees who are with you happy and
productive. That"s why it"s important to know and recognize the difference between
employees who leave because they are unhappy and those who leave for other reasons.

Industrial Relations Management
Assignment # 01
Reviewed and submitted by: Mansoor Ali Seelro (BBA VIII)


The following are some of the more common reasons for high turnover in businesses&
A bad match between the employee"s skills and the !ob. 'mployees who are placed
in !obs that are too difficult for them or whose skills are underutilized may become
discouraged and $uit. Inade$uate information about skill re$uirements that are
needed to fill a !ob may result in the hiring of either underskilled or over$ualified
workers. The re$uirements of a specific !ob should be carefully studied for the
re$uired skills, and workers should be tested for the re$uisite $ualifications. (se !ob
analyses and !ob descriptions to minimize the chances of this happening.
)ubstandard e$uipment, tools, or facilities. If working conditions are substandard or
the workplace lacks important facilities such as proper lighting, furniture, restrooms
and other health and safety provisions, employees will not be willing to put up with
the inconvenience for long.
*ack of opportunity for advancement or growth. If the !ob is basically a dead+end
proposition, this should be e,plained before hiring so as not to mislead the
employee. The !ob should be described precisely, without raising false hopes for
growth and advancement in the position.
-eelings of not being appreciated. )ince employees generally want to do a good !ob,
it follows that they also want to be appreciated and recognized for their work. 'ven
the most seasoned employee needs to be told what he or she is doing right once in a
while. .ake sure your employees know that they are appreciated.
Inade$uate or lackluster supervision and training. 'mployees need guidance and
direction. /ew employees may need e,tra help in learning an unfamiliar !ob.
)imilarly, the absence of a training program may cause workers to fall behind in
their level of performance and feel that their abilities are lacking.
(ne$ual or substandard wage structures. Ine$uity in pay structures or low pay is
great causes of dissatisfaction and can drive some employees to $uit. Again, a new
worker may wonder why the person ne,t to him is receiving a higher wage for what
is perceived to be the same work. You should have a wage and !ob evaluation
system in place not only so that you are sure to comply with legal re$uirements, but
also to avoid this problem.

If you suspect that you have a either a turnover or a morale problem, look at your
employees and ask yourself if any of the above apply.
Measuring and Preventing Turnover:
%hile measuring turnover for large companies with many employees is usually more
technical and the results more scientific, small businesses can also keep track of turnover
and try to spot trends and potential problems.
A small business owner can follow these steps for tracking turnover&

Industrial Relations Management
Assignment # 01
Reviewed and submitted by: Mansoor Ali Seelro (BBA VIII)

0eep a list or file of employees that leave. In the file, include&
the length of time that the employee worked for you
the position that the employee held
the reason that the employee left 1information from an e,it interview can help
here2
3ver time, try to spot trends in turnover.
Are there positions that you have trouble keeping filled4
5o employees tend to stay for the same length of time before they leave your
employ4
5o employees seem to be leaving for similar reasons 1like receiving more pay
or a more responsible position24

If you suspect there is a problem with one or more positions, try to remedy or prevent the
problem. It is sometimes possible to redesign a !ob by adding more attractive duties and
reassigning some less desirable ones.
If you suspect that you"re not paying enough, obtain information about what other
businesses are paying for similar positions.

If you suspect that people are leaving because positions elsewhere allow them more growth,
you can emphasize to future employees that the position has limited growth potential so
that they know what to e,pect, or you can try to find ways to e,pand the responsibilities of
the position.
If the problem seems to be with one specific position, look closely at the working conditions
of that position. %ere the employees in that position forced to adhere to impossible
deadlines, given all the worst tasks, or forced to work with difficult customers or employees
more than should be e,pected4 There may be something specific about this position that is
driving good employees away.
The Cost of Employee Turnover:
%hen an employee leaves your business, it costs your company in&
Productivity. %hen the employee leaves, productivity will usually take a downturn
because other workers may have to add the former employee"s duties to their own
workload, at least temporarily.
Money. In addition to the monetary costs associated with lower productivity, you
may have to pay employees overtime to get them to take up the slack left by the
former employee until a replacement can be found. You may also have to
face unemployment claims and pay for the cost of recruiting and hiring a
replacement.

Industrial Relations Management
Assignment # 01
Reviewed and submitted by: Mansoor Ali Seelro (BBA VIII)

Time. /ot only may you be distracted from your regular duties to cover for a former
employee, but you will now have to spend time and money advertising, interviewing,
and otherwise looking for a replacement employee. And don"t forget the time that
you spent training and hiring the former employee. %hen you lose a lot of
employees, you"re wasting time and money.

3nce you find and hire a new employee, you will still e,perience flagging productivity while
the employee learns his or her new !ob. )ometimes, depending on the !ob, temporary
employees can pick up the slack.
In other words, it costs the business money every time an employee leaves because it takes
even more resources to return to the same level of productivity or level of performance that
you had before.
)ometimes, though, if the worker in $uestion was a problem performer, productivity may
not suffer. In fact, you may be better off than if the dissatisfied employee had stayed on the
!ob.

3n the whole, you"re going to want to prevent turnover as much as possible because of the
high costs associated with it.
Preventing High Employee Turnover:
If a business wants to ensure that employees remain with the business, it has to&
Identify the positive aspects of the business that make employees want to stay.
'mphasize those aspects.
)ome internal factors that may influence your employees" desire to stay are&
desirable benefits
pleasant working conditions
opportunity for growth6advancement
pay
!ob security

In addition to the internal factors that make employees want to leave or stay, there are also
outside factors that can influence your turnover. You can"t do much about these factors but
what you can do is try to make the !ob as desirable as possible to minimize the chance that
e,ternal factors will lure your workers away.
To minimize unwanted turnover, give employees perks that are perceived by them as
benefits that 7make or break7 a !ob. Trade on your strong points. 8ob perks like fle,ible
hours or better+than+average benefits might keep employees in a !ob that they would
otherwise leave. Attempt to make work fulfilling and rewarding for your employees.

Industrial Relations Management
Assignment # 01
Reviewed and submitted by: Mansoor Ali Seelro (BBA VIII)

)ometimes the !obs that you have may not be particularly e,citing or offer a great potential
for growth, but they are still important and must be done. )o how can you handle this
potentially sticky situation4 )ome possible options are to hire temporary employees, or to
use part+time workers who are simply looking for a low+effort paycheck.