October 09, 2006	Monday	Ramazan 15, 1427

HUMAN capital enjoys a low priority in our local industry. As and when there are quality issues in textiles, the usual response from production managers is that it happened because of excessive manpower turnover and it will take time to train new workers.

A high manpower turnover has always had adverse effects on quality and productivity. In the local industry, particularly in the textile, leather and sugar sectors, the rate of manpower turnover is very high. In some cases, it is over 100 per cent which means that in one year more people leave their workplace than its total strength.

Though very few organisations monitor their rate of turnover or even bother about it, they must take a serious note of this high rate of manpower turnover for the sake of quality and productivity and try to reduce it.

Turnover cost: Many managers know that turnover cost is expensive but are not able to quantify its cost. Estimates of its cost may range from 50 to almost 200 per cent of annual compensation costs. The ones more difficult to estimate include: customer service, disruption, emotional cost, loss of morale, absenteeism in remaining employees, loss of experience and corporate memory.

The costs of repeatedly hiring and re-hiring can be staggering. Similarly, the cost of replacing professional workers may be far more expensive.

For many concerns, turnover costs are very high and can significantly affect their financial performance which include recruitment, selection and training of the new staff. Much time and expense go into this process.

Indirect costs include such items as increased workloads, overtime expenses for co-workers and the reduced productivity associated with low employee morale. Estimated costs vary from organization to organization, some as low as a few hundred thousand rupees and some as high as four times annual salary of an employee.

Reasons: In case a manager/foreman/supervisor leaves his job, other workers who were recruited by him or formed part of his group are likely to go along with him where he is taking up his new assignment.

Workers move in groups in our textile sector. Employees/workers are very closely knit with each other on the basis of caste, relationship, area, sect etc which form basis of their unity. That also reflects our culture.

In most of the local industry, wages are similar for various categories of workmen. So job change or seniority becomes immaterial and there remains no motivation for continuing a job with a particular place.

An employer can retain his employees by offering them competitive wages. If not, that is likely to end up in majority of his employees going away to somewhere else for better wages.

Employee turnover: With today’s baby boomer generation beginning to retire from the labour market, many companies find it increasingly difficult to retain employees. Turnover is becoming a serious problem in today’s corporate environment.

The employment culture is changing as well. It is now common to change jobs every few years, rather than grow with one company through one’s life-time employment as was once the common practice. In addition, employees are increasingly demanding a balance between work and family life. To reduce the turnover, recruitment on merit can erode the prevalent group system among the employees responsible for a major turnover.

Compensation: In textile sector over 98 per cent labour are working on minimum wages fixed by the government. There is no motivation to continue working in a certain factory. Performance based compensation/ annual increments can prolong workers stay with the organization.

Conditions: Working and living conditions are far from satisfactory. Efforts be made to improve upon these conditions which include: reduction in temperature, health and safety measures, hygienic living conditions, provision of proper canteen in housing colony at subsidised rates.

Our senior management has to recognise the value human capital in the 21st century. A job which offers career and long-term benefits will reduce rate of turnover.