Employee retention is the ability of a firm to convince its employees to remain with the business. It is often measured by the labour turnover of a business.
Labour turnover is defined as the proportion of a firm's workforce that leaves during the course of a year.
The formula for calculating labour turnover is shown below:
An example of using the formula is shown below:
It is important to remember that all businesses lose staff – for a variety of reasons:
In terms of this part of the course, we are more concerned with the loss of staff for reasons other than above. You might call this voluntary staff turnover – employees who leave of their own accord.
It is important to remember that labour turnover levels vary between industries. Successive surveys of labour turnover show that the highest levels are typically found in retailing, hotels, catering and leisure, call centres and among other lower paid private sector services groups.
Labour turnover levels also vary from region to region. The highest rates are found where unemployment is lowest and where it is unproblematic for people to secure desirable alternative employment.
There are many reasons why a high labour turnover figure (poor employee retention) may cause problems for a firm:
However, there are some advantages of a firm experiencing labour turnover:
A business can improve its employee retention by offering:
A business may also have to adopt more flexible working practices in order to retain staff and fit in with the changing trend in UK employment and working patterns. For instance, there is a greater emphasis currently being placed on "flexible hours contracts" and part-time working. This is mainly to allow for the growing number of women joining the workforce who have to juggle childcare and their working lives.
Join the tutor2u Business team for a resource-packed day designed to fast-track your lesson planning and preparation for the new Edexcel A Level Business specification. We'll look at the key changes in teaching content, explore the new challenges of teaching this linear specification and dive into some brand new teaching resources designed specifically for the new Edexcel A Level Business course from September 2015.
A complete collection of editable lesson topic worksheets and exam-style case studies that are ideal for teaching individual topics for the whole Year 1 (AS) teaching content.