Effect of Labour Turnover on Organisational Productivity

Topics: Human resource management, Human resources, Organization Pages: 8 (2563 words) Published: June 14, 2011
The practice of human resource management (HRM) is concerned with all aspects of how people are employed and managed in an organisation (Armstrong, 2009). The strategic business function organ of the organisation sees to the inflow and outflow of employees in the organisaiton. The HRM function of directing the organisation system to ensure that human talents are used effectively to accomplish desired goals is very crucial, thereby not left ignored.

Organisations zealous about growth would always intend to develop their respective current human capital and other potentials. But in this world of frequent upgrade and innovations in the business environment and the technological ways of doing things, organisations would commit themselves towards bringing their workforce to the task requiring intellectual and manual growth and development. The idea behind this would be to intensify the additional productivity generated by extra employee hired. All these put together would amount to organisations being cost conscious in making sure that employees with high human capital do not leave their organisations. But in order to be realistic, organizations cannot be everything to all people. No matter how great your company is, it is likely that some of your employees will eventually move on to other opportunities. That may be costing you a lot and affecting your well enjoyed stabilized organization productivity. Labour or worker or employee or staff turnover has it is often referred to, is the number of permanent employees leaving the company within the reported period versus the number of actual Active Permanent employees on the last day of the previous reported period (physical headcount). According to Business Dictionary (2011), the ratio of the number of employees that leave a company through attrition, dismissal, or resignation during a period to the number of employees on payroll during the same period makes up what is referred to as Labour Turnover. An employee leaving the organization either voluntarily or involuntarily is certain to have positive or negative effects on the organization. This as well would reflect on the productivity of the organization concerned. In other words, high turnover can be harmful to a company's productivity if skilled workers are often leaving and the worker population contains a high percentage of novice workers (Open Forum, 2011). This is especially the case if those leaving are either key to its success and continuity or do so because they think you have treated them unfairly, which could result in tribunal claims (Business Link, 2011). This means maintaining the satisfactory level of productivity might be threatened. Therefore curbing turnover to its optimal level for the organization is a major challenge. However, the research on the consequences of labour turnover is inconclusive, and provides little guidance on how much turnover, if any, is optimal (Siebert, 2006). It hereby leaves us wondering what optimal number is needed for the organization’s best productivity. As turnover even poses to be a major and widely studied organizational behavior phenomenon, it fosters why researchers are becoming interested in it more. It is a phenomenon that not just affects a company, occupation or industry, but an issue tackled by organizations all around the world. This is because at one employee’s voluntary or involuntary time they would have to leave the organization. (Abelson 1987; Campion 1991). 1.2 STATEMENT OF RESEARCH PROBLEM

Labour turnover as noticed, if not looked into, could eat deep into the profitability and threaten the sustainability of any organization. As a global challenge as well mandatory confrontation of the technological and environmental diversities which organizations have to face, many brows are raised on its persistence. The Nigerian insurance sector has not been left out as labour turnover has been...

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