Redundancies now at 2009 levels: report

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Redundancies now at 2009 levels: report

Involuntary turnover (redundancy levels) among Australian organisations has increased across all industries to rates not seen since 2009, while voluntary turnover has dramatically slowed according to a recent report.

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Involuntary turnover (redundancy levels) among Australian organisations has increased across all industries to rates not seen since 2009, while voluntary turnover has dramatically slowed according to a recent report.

Mercer’s 2013 Human Resource Effectiveness Monitor (HREM) has found the median rate of involuntary turnover in Australia is currently at 3.4 per cent, compared to 2.2 per cent in 2012. In contrast, voluntary turnover rates have decreased to 9.4 per cent from a pre-GFC high of 15.7 per cent. Combined turnover rates have fallen by a quarter from 17.9 per cent to 12.8 per cent.

Key points in the report include:
    • redundancies up and voluntary turnover down
    • risk of disengaged workforce
    • increase in voluntary turnover in construction and engineering industries
    • females have higher voluntary turnover and males have higher redundancy rate.
Tightening budgets

Garry Adams, Leader of Mercer’s Talent Business in the Pacific, said ‘ensuring healthy staff turnover rates is as important to a business as retaining key talent in the workforce. Getting workforce composition right can have a critical impact on an organisation’s bottom line’.

‘Our data tells us people are not changing employers as frequently as they were in the pre-GFC environment, however tightening budgets are contributing to higher redundancy levels. Now one in four departures is an involuntary departure compared to around one in seven a few years ago.’

Lower turnover — mixed blessing

Businesses should understand what a healthy turnover rate for their industry is and make informed decisions to protect against a disengaged and less productive workforce. Lower turnover rates can be a mixed blessing. While lower turnover should contribute to increased productivity because there is less disruption from hiring delays and unfilled roles, managers need to ensure the workforce is engaged and productive. In tight labour markets, where employees are reluctant to leave due to uncertainty of finding suitable alternative employment, unhappy employees may stay but with a low level of engagement and productivity.

‘Employee turnover is commonly used to measure the effectiveness of HR and workforce management practices, but taken alone, employee turnover is often insufficient. For real insights into the complex dynamics of workforce performance, turnover should be monitored with other internal metrics such as tenure and external market conditions,’ said Adams.

Turnover — breakdown

The HREM reports staff are most likely to leave an employer in the first three years (2.8% voluntary turnover rate median across all industries) but the median tenure rates have remained steady at seven years across all industries. Across all industries females have a higher voluntary turnover to males (11.2% compared to 9.0%) and lower redundancy rates (2.9% compared to 4.3%). The public admin/not-for-profit sector has the lowest tenure rate with a median of five years.
 
The turnover movements found in HREM are compounded for employers by increasing time to fill specialist and senior management roles (40 days respectively).

‘Decreasing voluntary turnover and increasing time to recruit specialized skills means a tougher labour market and potentially being forced to do more with less for longer.’

‘Organisations need to make fact-based, data-driven decisions to ensure they maintain a healthy turnover rate and retain the right people, with the right skills, in the right places,’ said Adams.
 
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