51.2 labour productivity and turnover 

labour productivity;

measures how well employees are doing. compares the number of workers with output that they are making.

labour productivity - output per period / number of employees per period

labour turnover;

measures the rate of change of a firms workforce

number of staff leaving the firm per year / average number of staff X 100

factors affecting labour turnover;

if labour turnover is increasing it could be because of dissatisfaction within the workforce.

internal causes of an increasing rate of labour turnover could be;

• a poor recruitment and selection process, which can appoint the wrong person to the wrong post.
• ineffective motivation/leadership, leading to workers lacking commitment to this particular firm.
• wage levels that are lower than those being earned by similar workers in other local firms. if wage rates are not competitive, workers are likely to look elsewhere to find a better reward for doing a similar job.

external causes of an increasing rate of labour turnover could be;

• more local vacancies
• better transport links making wider geographical area accessible. new transport can allow workers to take employment that was previously out of reach.

consequences of high labour turnover;

negative effects

• cost of recruiting replacements
• cost of training replacements
• time taken for new employees to settle and adopt firms culture
• the loss of productivity while the new workers learn the new ways of working

positive effects;

• new workers can bring new ideas and enthusiasm
• workers with specific skills can be employed rather than having to train existing workers
• new ways of solving problems