A high rate of attrition or manpower turnover in an organization means increased recruiting , selection and training costs. It can also mean a disruption in the efficient running of an organization when knowledgeable and experienced personnel leave and replacements must be found and prepared to assume position of responsibility .
All organizations, of course , have some turnover .If the right people are leaving the organization –the marginal and sub marginal employees ---turnover can be positive. It may create the opportunity to replace an individual with someone with higher skills or motivation ,open up increased opportunities for promotions and add new and fresh ideas to the organization .But when turnover is excessive or when it is confined to the superior performers , it can be a major problem for the organization effectiveness.
Employee turnover as one of the four primary dependent variables in Organizational Behavior(OB) This consistent with the view –held by executives, HRD Manager, and researchers in OB. –that turnover has negative consequences for Organizational performance. When employee quits and has to be replaced , the organization incurs some very real and tangible costs.
Every turnover incidence includes both direct and indirect costs. A review of these costs a long way in explaining why management should be concerned with minimizing employee turnover.
When an employee leaves, a replacement needs to be found. If inadequate notice is given, management will not have time to train the replacement. and temporary employee will need to fill in. The result is drop in productivity
If sufficient notice is given ,the organization incurs the cost of recruiting , selecting, and training the replacement. In many cases, there may be a
Period of a weeks or months where 2 people are on the payroll to do one job- the departing employee staying on to train his/her replacement.
The recruitment and training costs for any job will be substantial. Given the direct and indirect costs associated with turnover, it is obvious that a management team that is concerned with maintaining effectiveness and efficiency will want to keep employees’ turnover to a minimum..
All turnover of manpower is not bad for the Organization. Sometimes lower attrition also adds benefits to the organization. Infact a healthy level of employee turnover may be a virtual wind fall in terms of money for the organization.
Let us consider some aspects of manpower turnover one by one,
All attrition or turnover need not be taken as a negative factor. When we look at voluntary turnover which is initiated by the management the departure is functional. Such a decision is taken for a cause.
People leaving the organization voluntarily and in so doing benefit it. They may have been. poor or marginal performers but because of the unions or sympathetic bosses, the desire to maintain group moral or similar factors these people are not terminated.
All voluntary quits are not controlled by the Management . There are situations in which no reasonable action by management could have prevented it .Its a waste of organization to try to reduce this element of turnover.
One of the neglected issues of attrition is that it has a monetary effect on the organization The turnover may be reduced but its cost may exceed the benefit.. Because he new recruits may be costing less to the company than the senior employees who have left the organization.
Managements can better adopt a strategy to trade off higher turnover for lower labor costs particularly when the replacement costs are lower and organization is getting rid of dead wood.
But the management must also take steps so that the turnover may not be excessive ,that is, its cost do not exceed its benefits. A large amount of money might be saved each year by reasonable level of turnover.
V.Sree Rama Rao, B.E.,M.I.E.,MIMA has put on 34 years in leasing Indian Corporates in Techno-Commercial areas and retired rrecently as General Manager. He is a practicing Chartered Engineer and a Business Consultant specialized in the areas of Materials Management Imports, HR and General Management.. He can be contacted on e-mail firstname.lastname@example.org