The term wastage of human resources is the loss of employees other than by redundancy. Redundancy points out the position of the employee as no longer needed for any available job and therefore liable to dismissal. In an organization, the wastage of human resources is mainly caused by the factors Labor turnover, Idle Time and Absenteeism.
1. Labor Turnover
The change in workforce is known as labor turnover. It is the rate of change in the composition of the labor force in the organization. Whenever an employee leaves the organization, the management, has to sustain loss and wastage arising from the replacement of the leaving incumbent, by inexperienced new labor force. This replacement cost also includes cost of recruitment, selection and training of new employees. Loss of output due to the gap in obtaining new workers, loss due to inefficiency of new workers, cost of accidents due to lack of experience of new workers and cost of scrap and defective work of new workers are the replacement cost involved in labor turnover. In order to keep the workforce satisfied and to prevent or discourage them from leaving the organization, the management incurs the following costs:
- Cost of welfare activities
- Cost of medical services
- Pension Schemes
- Extra bonus
In spite of the preventive measures, if there is higher labor turnover then it will deplete the stock of human resources and also lead to its wastage. For example in a company an executive officer is appointed and sent abroad to get special training on the work method. The cost of giving him the training is 50000$. Unfortunately he leaves the job (no contractual liability or bond) and the company has to replace another incumbent with the same training and additionally it has to spend another 50000$ for making the new incumbent fit for the job. Human resources at a cost of 50000$ is wasted due to the turnover. In order to avoid wastage, by turnover the management should take the following steps:
- Suitable and satisfactory wage policy: When the management is suitably rewarding the labor by devising a satisfactory wage policy, the turnover may be low.
- Proper work conditions: The management should see that the workers are provided proper working conditions to ensure their health and safety.
- Sympathetic attitude of personnel department: To prevent turnover, the personnel department should have positive and sympathetic attitude towards the workers and motivate them in the right perspective.
- Financial and non financial incentive plans: To recognize both efficient and normal work, the management must frame both financial and non financial incentive plans.
- Promotion opportunities: Majority of the workers will be on the look-out for an opportunity to quit the organization when there is no scope or little scope for promotion in spite of satisfactory remuneration. When the opportunities for promotion are more, the turnover may be low.
- Labor participation in management: This is one of the recognized ways of recognizing labor, since it gives the worker a sense of involvement in management and his participation in managerial affairs will give him the sense of responsibility and he will not think of leaving the organization.
- Effective grievance procedures: The workers must be given explicit and vivid procedures to represent their grievances so that the grievances could be redressed immediately and reduce the depression of workers. Consequently, his idea to quit on this reason may be dropped by him.
- Welfare measures: Strengthening the welfare measures in general will improve the morale and motivation of the workers and will reduce turnover.