Labour Turnover
- Labour turnover measures the proportion of employees leaving a business during a specific time period
- It is expressed as a percentage and is calculated using the formula
Internal and External Factors that Affect Labour Turnover
- A rising rate of labour turnover can signal internal human resource management problems such as
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- Poor management leading to workers losing commitment
- A poor recruitment and selection approach leading to staff leaving soon after starting their job
- Low wage levels compared to those that could be earned elsewhere
- External factors can also increase labour turnover in a business
- A buoyant local economy where workers are attracted to employment opportunities elsewhere
- Improved transport links that provide an opportunity for workers to seek work across a wider geographical area
The Consequences of high Labour Turnover
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Worked example
In 2022 Domus Construction Ltd employed 7,200 workers, six per cent of whom worked at the head office.
During 2022 fifty-four head office employees left the business.
Calculate the labour turnover of Domus Construction's head office in 2022. (3 marks)
Step 1: Calculate the number of head office workers
0.06 x 7,200 = 432 workers (1 mark)
Step 2: Apply the labour turnover formula
Labour Retention
- Labour retention measures the proportion of employees remaining with a business during a specific time period
- It is expressed as a percentage and is calculated using the formula
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A high level of labour retention means that few staff are leaving the business during a given period
Worked example
In 2022 Westington College employed 4,240 employees, 265 of whom left the college during the year
Calculate Westington College's staff retention rate in 2022 (2 marks)
Step 1: Calculate the number of employees not leaving
4,240 - 265 = 3,975 (1 mark)
Step 2: Calculate the retention rate using the formula
(1 mark)