IGCSE, A Level Business Student Forum

Q5 Analyse the disadvantages of high labour turnover. [5]

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Possible Structure:
[KN]
[AN]
[AN+]

[KN]
[AN]
[AN+]

KN: Higher recruitment costs
AN:Leads to wastage of resources, products and time thus making the business act less cost effectively
AN+: Due to bad financial stabilty of business less or no banks/governments will provide them with financila support through loans/ Can't invest on business growth

KN: Reputation damage
AN: Less ethical people join
AN+: Since ethical people are always innovative and creative there won't be much innovation being brought up into the business

[KN]: Labor turnover results in increase in cost of production.
[AN]: This is due to repeated recruitment, selection and placement of employees.
[AN+]: Loss of experienced workers .
[KN]: Lower quality of work can be one of the negative impacts of employee turnover.
[AN]: Either the company functions with a lower number of employees or with inexperienced employees that don't have proper training.
[AN+]: It can result in low quality work and low productivity.

[KN] Poor customer service. [AN] As there may be a rise in staff vacancies, there may be a decline in the quality of customer service provided until new recruits are appointed. [AN+] As a result, customer loyalty may also be harmed due to less familiar contact and they may choose to purchase from rivals whose staff they are more familiar with and who offer better customer services. This may reduce customer base of this business and it may loose market share.

[KN] High costs for HR department. [AN] As the leaving employees may need to be replaced this increases the budget required for recruitment, selection and training of new staff. [AN+] This may reduce the finance that could be spent elsewhere and hence an opportunity cost is created. The recruitment selection and training process is also time consuming and this may further add to higher costs as output is less than what it could have been if there was enough labour working.

[KN] More pressure will be put on remaining employees to keep operations running
[AN] employees will underperform and quality of goods produced will be lowered
[AN+] customer dissatisfaction and lowered sales will occur resultingly

[KN] high recruitment costs of new employees
[AN] New employees may not be as experienced as the old ones
[AN+] Employees will need to be trained hence training costs will also increase

[KN]: increase in costs for the business
[AN]: the organization would have to bear the expense of hiring new employees
[AN+]: after recruitment, the company might also have to train the employees thus increasing training costs

[KN]: till new employees are hired, the current employees would be burdened by the work
[AN]: thus, affecting the productivity and product quality
[AN=]: resulting in dissatisfied customers thus reduced sales revenue

KN: Frequent turnover can disturb the workflow.
AN: Loss of expertise and teamwork.
AN+: Decreased productivity.
KN: New employees take time to become familiar with customers' needs, and preferences.
AN: This can lead to lower service quality.
AN+: This can potentially lead to a decline in customer loyalty.

kn: increase in costs
an: when hiring new employees, the business will have to spend time and money on recruitment, selection, and training, which will lead to an increase in costs.
an+: therefore, there is an opportunity cost as the business could have invested that time and money in something else that would have been more profitable

kn: difficult to establish customer loyalty
an: if employees keep changing, it might be difficult to establish customer loyalty as they prefer to deal with familiar faces.
an+: this could lead to a decrease in customer satisfaction which will result in a negative impact on reputation

[KN]Frequent turnover can lead to disruptions in workflow and a loss of productivity.
[AN] New employees often take time to become fully productive and may not initially match the efficiency and knowledge of their predecessors.
[AN+]The departure of experienced employees may also result in a loss of institutional knowledge, particularly if these employees hold critical roles within the organization.

[KN]Excessive turnover can harm an organization's reputation both internally and externally.
[AN]High turnover rates may be taken as a sign of instability or dissatisfaction within the company, making it challenging to attract and retain top talent.
[AN+]External stakeholders, such as clients, customers, and investors, may view a high turnover rate negatively, impacting the company's brand image.

(Kn) hiring costs
(An) there will be much more time and recourses spent on recruitment making it difficult for the business to constantly have to put up with this.
(An+) these funds could have potentially been used elsewhere such as on marketing that would have benefited the business in increasing sales. Thus a disadvantage.

(Kn) hindered brand image
(An) the company may develop an image of being unable to retain employees making it look bad and hence putting people off and damaging reputation.
(An+) this may put people off from joining the company making recruitment even more difficult and costly. Thus a disadvantage.

[KN]: It can result in increased cost for recruitment and training of the new employees.
[AN]: The business may need to hire a recruitment agency.
[AN+]: The business may not be able to use money for expansion due to increased costs.

[KN]: Existing employees may experience lowered morale and job satisfaction due to the instability and uncertainty caused by a high labour turnover rate.
[AN]: They may become demotivated and their productivity would decrease. The quality of the products may also decrease.
[AN]: This would lead to the deterioration of brand image as customer dissatisfaction would arise due to poor quality.

Kn: Higher cost of recruitment
An: Recruiting new employees includes their training and development according to the environment of the organisation and train and maybe business hires a recruitment agency which they need to pay to them
An+: These costs have an opportunity cost to invest somewhere else.

Kn: Time taking process
An: As while the recruitment process is started it takes time to collect CV’s, interviewing and selecting the employee this creates burden on the current employee .
An+: This may lead to a decrease in quality of service provided by the employees.

[KN]High labour turnover can increase cost for recruitment and training of new employees.
[AN]They might need to hire a recruitment agency.
[AN+]This will create opportunity cost as it could have been used for expansion.

[KN]It will damage the business reputation as an employer due to inconsistent quality.
[AN]It may become difficult for business to find new employees.
[AN+] Business might have to pay higher to attract employees increasing cost.