eco 0455

2. Labour turnover
➢ Refers to the amount of people who leave an
organization, expressed as a percentage of the
workforce, per time period (usually one year).
Calculating and monitoring the labour turnover rate is
important for an organization’s workforce planning.
➢ Labour turnover in any organization is predictable and
unavoidable because employees will leave for their
own personal and/or professional reasons. People may
leave an organizations for several reasons, including:

3. 1. External promotion* opportunities in other organizations.
2. Higher pay / better remuneration in other organizations.
3. Dissatisfaction in the workplace, such as poor working relationships or
not feeling valued.
4. Resignations due to personal reasons (such as family commitments).
5. Career break, perhaps to pursue higher and further education or to start
a family.
6. Retirement (when people reach the statutory age to leave the
workforce).
7. Redundancy (employees being let go as their job roles no longer exist).
8. Dismissal (being "fired" for misconduct or under-performance at work).

4. The labour turnover rate per time period is calculated by
using the formula:

5. ➢ In general, organizations prefer to have a lower labour
turnover rate, due to the opportunity cost, such as the
higher costs associated with replacing and recruiting
new staff.
➢ A low labour turnover rate will reduce the costs and time
needed for induction training, improves the
personalisation of customer service, as well as increase
labour productivity, all of which provide benefits to the
firm.The opposite of labour turnover is employee
retention.

6. Retaining employees is important, as they may have established essential skills, expertise
and institutional knowledge. In addition, there are significant costs of high labour
turnover. These include the costs related to:
1. Recruiting new (replacement) workers.
2. Inducting and training new staff.
3. Management time during the recruitment process.
4. Lost productivity during the time between the loss of employees and hiring
replacement workers.
5. Getting workers familiarised with the operations and corporate culture of the
organization, such as adjustment to the new working environment, and company
policies, procedures and processes.
6. Negative impact on remaining workforce, e.g. overburdening existing staff, poor
morale, and lower productivity.
7. Negative publicity if the organization struggles to retain its workers.

8. ATL Activity 1 - Why Quit?
"The only way to do great work is to love what you do. If you haven't found it yet, keep looking.
Don't settle.”
- Steve Jobs (1955 - 2011), Co-founder of Apple
Read this excellent LinkedIn article about bad management mistakes that make good people quit their
jobs. What are the main reasons given?
Read the full article here.

9. ATL Activity 2 (Thinking skills) - The costs of high labour turnover
Read this interesting article from the Huffington Post about the true costs of high labour
turnover.
What are the main reasons suggested in the article?
To add context, after students have read the article, ask students to discuss the costs of
high labour turnover at their school, should a significant number of IB Diploma teachers
choose to leave.