Wastage Analysis

In human services, turnover, or employee withdrawal behavior, has become a

serious personnel problem.
- Turnover creates considerable costs for the organization, decreases
productivity, disrupts worker relationships, and can increase waste and
accidents.
- Thus turnover must be considered during human resource planning
especially 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 "turnover."
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 straightforward: Count the number of turnovers
and then compare that number with the total number of employees. From
this, a percentage rate is determined.

Turnover rates depend on a variety of employees demographic, social and

economic characteristics, as well as on labor market conditions. Usually, exit
rates are higher (Taylor 2005):
the lower the age of an employee,
the shorter the span of work in a particular company,
the lower the employee skills and responsibility,
the lower the unemployment rate in the economy

Wastage analysis is an element of labor 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.

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 individual situation.
o Thus administrators might also want to compare the rate internally (Watts &
White, 1988).

Internal turnover comparisons often involve the dividing of employees 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 preventative
strategies can be sought.

Different methods of Wastage Analysis

- Labor Turnover Index:- It indicates the number of leavers as percentage to

average number of employees.
It is calculated in the following way:

Labor Turnover = Number of employees leaving/Average number of employees

employed * 100.

Stability Index = number with more than 1 year service now / total employed
1 year ago * 100

Cohort analysis

CohortA group of people sharing a common temporal demographic

experience who are observed through time. For example, the birth cohort of
1900 is the people born in that year. There are also marriage cohorts, school
class cohorts, and so forth.

Cohort AnalysisObservation of a cohort's demographic behavior through life

or through many periods; for example, examining the fertility behavior of the
cohort of baby boomers. Rates derived from such cohort analyses are cohort
measures.

Industrialized countries are currently experiencing drastic demographic shifts

due to declining fertility rates and longer life spans. In most cases, this shift
is leading to a decline in the working age population and an increase in the
retired-age population.

Economists and policy-makers are concerned that the smaller pool of workers
will not be able to support the greater number of retirees, leading to declines
in overall living standards. However, resistance has been strong in most
countries where governments have attempted to adjust spending on
government-funded pensions or raise the retirement age. Achieving viable
solutions to address the unique needs of an aging population may be tricky,
but delaying the effort may make successful long-term planning extremely
difficult.

Several wildcard issues or unknowns are worth considering in addition to

the factors already widely recognized as critical to the future of retirement.
Some examples include shifting productivity rates, changing family structures,
such as the increase in single-person households and the number of families
headed by single parents, and demographic issues, such as income migration
when retirees relocate from one part of the country to another.

While there may be no significant increase in the proportion of individuals

who work beyond retirement age, the sheer size of the baby boom generation
suggests there will be more older workers in the workplace resulting in
implications for HR professionals in a number of areas, including benefits,
health and safety, social security and replacement.