Cost of Labour Turnover

Cost of Labour Turnover
The Cost of Labour Turnover can be examined under two broad categories ;
A.Preventive cost
B.Replacement cost
Preventive cost : As the name suggest,these are cost which are incured by a firm to keep a contented labour force force so as to prevent axcessive labour turnover,These A.cost therefore,include :
01.Personnel Administration
02.Medical Services
03.Welfare-e.g.provision for subsidised canteen meals,sports facilities,etc.
04.Gratuity and Pension Schemes
05.Aportion of high wages,Bonuses,perquisities,etc.Which are paid in excess of the average amount paid in the industry to discaurage labour turnover.
B.Peplacement cost :
Labour turnover is assopciated with replacement.Replacement nacessitates,recruitment,training,absorpsion of new workers.Since the new worker will take more time to do job than a trained worker,There will be loss of output and more wastage.Therefore,replacement cost will mean cost of all these elements.More precisely,the following may be enumerated under this heading ;
01.Cost of recruitment,training,Induction etc.
02.Loss of Output due to :
a.time-lag between defection and recruitment
b.inefficiency of new workers
03.cost of tooland machine breakage
04.cost of scrap and defective works
05.cost of additional supervision nacessitated by inexperiences of new workers.
06.cost of additional compensation payable arising out of frequent accidents.
07.loss of goodwill and hence high costs in termes of disadvantageus labour contracts.
The overall cost of labour turnover will be reflected in one or more of the items or heads already mentioned.The cost may be shown per worker employed or replaced or as a fraction of the total cost or selling price.Howover the more convinient method is to express it as follows :