Effect of Labour Turnover on Cost

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The Labour Turnover in excess of normal rate is high turnover, and the turnover below the normal rate is low turnover. It is always better to keep the turnover low, but it should nto be construed that the factories with low turnover are always more productive. There may be low turnover in a factory for the reason that the workers engaged therein are below standard and so they cannot find better place in other factories. Secondly, low turnover in the senior scales may not provide promotion factories. Secondly, low turnover in the senior scales may not provide promotion opportunities to the young and promising employees and so they may like to shift to other factories for better prospects.

 

A high turnover has an adverse effect on the cost of production due to the following reasons:

  1. Change in workers interrupts production and the production goes down.
  2. New comers take time in learning the factory procedure and the work procedure.
  3. The tools and machines cannot be handled as efficiently by the new workers as hither to done by the old staff. There are chances of more break-downs and of greater cost of repairs of machines.
  4. What is true of machines is also true of material handling and usage by the new workers.
  5. The rate of accidents may increase, the rate of defectives in the finished output may increase, and there may be increased wastage of time.
  6. The cost of making selections and cost of imparting training to the new entrants would further increase the cost and reduce the profits.
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