Empolyee Turnover and Absenteeism

Topics: Employment, Bureau of Labor Statistics, Costs Pages: 6 (1909 words) Published: March 12, 2013
In human resources context, turnover or staff turnover or labour turnover is the rate at which an employer gains and loses employees. Simple ways to describe it are "how long employees tend to stay" or "the rate of traffic through the revolving door". Turnover is measured for individual companies and for their industry as a whole. If an employer is said to have a high turnover relative to its competitors, it means that employees of that company have a shorter average tenure than those of other companies in the same industry. High turnover may be harmful to a company's productivity if skilled workers are often leaving and the worker population contains a high percentage of novice workers. In the United States, the average total non-farm seasonally adjusted monthly turnover rate was 3.3% for the period from December 2000 to November 2008.[1] However rates vary widely when compared over different periods of time or different job sectors. For example, during the period 2001-2006, the annual turnover rate for all industry sectors averaged 39.6% before seasonal adjustments,[2] during the same period the Leisure and Hospitality sector experienced an average annual rate of 74.6%.[3] Contents [hide]

1 Costs
2 Internal versus external
3 Skilled vs. unskilled employees
4 Voluntary versus involuntary
5 Causes of high or low turnover
5.1 Investments
6 How to prevent turnover
7 Calculation
8 Models
9 References
10 Further reading
10.1 Historical interest

When accounting for the costs (both real costs, such as time taken to select and recruit a replacement, and also opportunity costs, such as lost productivity), the cost of employee turnover to for-profit organizations has been estimated to be up to 150% of the employees' remuneration package.[4] There are both direct and indirect costs. Direct costs relate to the leaving costs, replacement costs and transitions costs, and indirect costs relate to the loss of production, reduced performance levels, unnecessary overtime and low morale. In a healthcare context, staff turnover has been associated with worse patient outcomes.[5] [edit]Internal versus external

Like recruitment, turnover can be classified as "internal" or "external".[6] Internal turnover involves employees leaving their current positions and taking new positions within the same organization. Both positive (such as increased morale from the change of task and supervisor) and negative (such as project/relational disruption, or the Peter Principle) effects of internal turnover exist, and therefore, it may be equally important to monitor this form of turnover as it is to monitor its external counterpart. Internal turnover might be moderated and controlled by typical HR mechanisms, such as an internal recruitment policy or formal succession planning. [edit]Skilled vs. unskilled employees

Unskilled positions often have high turnover, and employees can generally be replaced without the organization or business incurring any loss of performance. The ease of replacing these employees provides little incentive to employers to offer generous employment contracts; conversely, contracts may strongly favour the employer and lead to increased turnover as employees seek, and eventually find, more favorable employment. However, high turnover rates of skilled professionals can pose as a risk to the organization due to the human capital loss in the form of skills, training, and knowledge. Notably, the specialization of skilled professionals makes them more likely to be re-employed within the same industry by a competitor.[citation needed] Therefore, turnover of these individuals incurs both replacement costs to the organization as well as resulting in a competitive disadvantage to the business. [edit]Voluntary versus involuntary

Practitioners can differentiate between instances of voluntary turnover, initiated at the choice of the employee, and those involuntary instances where the employee has no choice in...
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