Thursday, April 29, 2010

Wastage analysis

Concept, meaning and definition

- It is an element of labour turnover
- It is severance from the organization, which includes voluntary retirement, normal retirement, resignations, deaths and dismissals.
- It decreases with the increase of length of service.
- It also decreases with increased skill exercise and age.

- In human services, turnover, or employee withdrawal behavior, has become a serious personnel problem.

- Turnover creates consider¬able costs for the organization, decreases productivity, disrupts worker relationships, and can increase waste and accidents.

- Thus turnover must be considered during human resource planning es¬pecially in regard to supply forecasting.

- Organizations must expect a certain amount of turnover, but they must also be able to calculate and evaluate their turnover rate.

- To calculate turnover rates, administrators must first define a "turn¬over." Discharges, retirements, and deaths may be areas that create problems in the definition. Once a definition is determined, however, data collection and calculation of turnover rates is relatively straight¬forward: Count the number of turnovers and then compare that number with the total number of employees. From this, a percentage rate is determined.

- Evaluation of turnover is a bit more complex. There are a number of ways to conduct turnover analysis;

o comparison studies are among the simplest.
o Administrators may want to compare the turnover rate in their organizations with that of other organizations, with data presented by government agencies or trade organizations, or with organizational objectives.
o Although these comparisons can be valuable, they provide little information in regard to the organization's indi¬vidual situation.
o Thus administrators might also want to compare the rate internally (Watts & White, 1988). Internal turnover comparisons often involve the dividing of em¬ployees who have left by a variety of factors: department, supervisor, performance level, length of employment, and career path (external hire or internal hire/promotion). The division of employees in this way can provide insight into the causes of turnover.
o Qualitative information to supplement the analysis can be obtained by job satisfaction surveys or exit interviews. Ultimately, solutions or pre¬ventative strategies can be sought.

Difference methods of Wastage Analysis

- Labour Turnover Index:- It indicates the number of leavers as percentage to average number of employees.
- Labour Turnover = Number of employees leaving/Average number of employees employed * 100.

Stability index

Concept, meaning and definition:
- Stability Index = number with more than 1 year service now / total employed 1 year ago * 100

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