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Turnover Turnover is defined as any departure beyond organisational boundaries Turnover may be voluntary on the part of the employee resignation or involuntary death requested resignation Not all turnover is bad and expecting to eliminate turnover completely is unrealistic and impossible due to natural turnover from retirement Advantages Young workers bring new skills and ideas into the firm Especially useful in industries undergoing rapid technological change In stagnant firms new workers can bring about change to the companys culture norms and belief thereby stimulating growth New workers have often learned the latest techniques and methods so they will require less initial training and retraining Disadvantages Older workers have well-honed job skills May have a better handle on the information that is of most benefit to the firm So will have an advantage in firm-specific human capital and in the general human capital that is best learned on the job The following factors influence the optimal ratio of younger to older workers 1Technological change is very rapid in an industry and technology is often embodied in the new entrants 2The amount of skills learned on the job is low relative to the amount learned in formal programs before entering the labour force 3The firms experiences are idiosyncratic hence senior workers are more likely to have particular knowledge of the firms idiosyncratic details Hence a mix of old and new workers is likely to produce the most productive work environment Senior workers have more firm-specific human capital so firms are less likely to fire them However when downsizing is necessary the firm maximises its profits by laying off from both ends of the age distribution firm So layoff the oldest and youngest workers when there is a decline in demand for the firms products The youngest worker can be laid off directly without much difficulty Older workers must be handled with care both for legal and reputational reasons It is
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