Can a labour turnover takes company towards financial Crisis?

Labour means a white-collar or blue-collar person who agrees to work on agreed compensation for the allocated hours and space to learn or gear up their expertise and skills. In terms of compensation, labour would get a basic salary, Dearness allowance and Travelling allowance. Allowances are depending on the company's policies and the type of the work, like in chemical industries companies must pay the medical allowance and insurance. Also, different countries have different ways to pay the salaries like in India salary is being paid monthly, considering the 30/31 days of the month. In the UK people get hourly wages and they get paid for 21/22 days. Government policies and regulations over salaries and allowances are different in different countries.

What is labour turnover?

Labour turnover simply means several employees leaving the organisation in a year. It is calculated every year to know the potentiality of an organisation. A lower ratio of labour turnover means that employees are happy and growth level of both employees and organisation is high, but a higher ratio of labour turnover indicates that employees are not happy and growth level of both employees and organisation is low. Labour turnover is also considered the indicator of the company's current working capital. This also helps stakeholders to know about the efficiency of the company.

Why labour turnover takes place?

1. Salary and allowance issues.

This is the biggest reason for labour turnover. Some companies pay very low amount than the labour's ability, also some companies pay higher wages than required profile. Companies also make differentiate on allocating the wages like in one who is giving full efficiency and dedication to work, completing the task on time and satisfying the clients, being punctual in office and in work but paid low then one who is not punctual, not giving so efficiency, leniency towards client and office but they get paid higher because either they are old employees of companies working more than 5 years or they had good relationships with their seniors. Another reason is growth, employee changes job because competitor or colleague company is paying higher than existing, or it's not happy with increment given. Many companies promise for the allowance will be provided properly, but in reality, for example, the company claims that it is providing travelling allowance but when employee checks its payslip there travelling allowance is shown provided but included in salary. This is called misrepresentation of claims by the company.

2. Management issues

This is the second biggest factor in labour turnover. Some companies, management authorities do not behave properly to their juniors. Middle-level management like senior managers or team leaders behaviours towards their junior can lead the turnover. The major reason for their behaviour can be arrogant nature, egoism of senior position, good personal relationship with their seniors/upper-level management, and being old employees of an organisation working more than 5/6 years. Sometimes senior employees either degrade their juniors/ colleagues in front of management or shows the juniors/colleagues their hard work as their own for acquiring the new project/ Clients, for getting incentives/ awards or for promotion. This is known as "Corporate Politics". This leads the frustration, stress, hatred towards work, hatred towards company and management. It results, many employees provide their review on recruiting websites like "No issues with work and compensation but the working surrounding is not good", "not good support of managers and colleagues" etc.

3. Lack of training

Already in India, there is a lack of skilled labour. Many companies recruit the fresher for a job, they provide training from well-experienced seniors or higher management, when trained employees were ready for job they allocate them to nearby branches or work field. This management concept is followed by big corporate companies and now this concept is also followed by every big organisation in the world. As like fresher have chosen for a job sometimes their lenient behaviour can disappoint the trainers which effect the training, sometimes its difficult to explain the concept by trainers which took more time then preallocated time given by the company. Therefore sometimes trainer skips concept or explain in a very short way. Untrained or improperly trained employees is also a cost for the company which leads to low productivity for the company. A trained employee is always known as the key to growth and expansion of the company.

4. Slow opportunities

Nowadays people want opportunities to grow very quickly. Therefore they learn degrees from well-recognized institutes, but it also takes time. Even getting the best degrees, people need the experience of their industry. Working for the one year or two years and then expecting to get manager post! A manager has to manage juniors, target/job given by the company, have to report everything to its senior and stakeholders. To answer and manage them effectively, the well experienced, qualified and trained person is being needed. Being impatient can also lead to an employee losing its bright opportunities. Many people working 8 or 9 years but they get higher post very late this is because of impatient and improper training.

In this blog, I have explained about labour turnover and reasons of labour turnover.

In our next blog, I will explain the effects of labour turnover and measures to reduce labour turnover.

Stay happy be connected!!!