Employee Turnover

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Topics: Employment
Turnover (employment) Turnover, in a human resources context refers to the characteristic of a given company or industry, relative to rate at which an employer gains and loses staff. If an employer is said to have a high turnover, it most often means that employees of that company have a shorter tenure than those of other companies in that same industry. Similarly, if the average tenure of employees in a particular sector is lower than that in other sectors, that sector can be said to have a relatively high turnover. In the U.S., for the period 2001-2006, the annual turnover rate for all industry sectors averaged 39.6%, as compared to the Leisure and Hospitality sector which averaged 74.6%. {text:bookmark-start} {text:bookmark-end} Costs 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 (Schlesinger and Heskett, 1991). There are both direct and indirect costs. Direct cost relate to the leaving costs, replacement costs and transitions costs, while indirect costs relate to the loss of production, reduced performance levels, unnecessary overtime and low morale. {text:bookmark-start} {text:bookmark-end} Internal vs. external turnover Like recruitment, turnover can be classed as 'internal' or external [3]). Internal turnover involves employees leaving their current position, and taking a new position with 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 thus this form of turnover may be as important to monitor as its external counterpart. Internal turnover might be moderated and controlled by typical HR mechanisms, such as an internal recruitment policy or

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