Study Notes management accounting acca f2

 
Poor morale and low motivation within the workforce 
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Making employees to work under uncomfortable environment 
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Too much workload on an employee 
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Recruiting employees which are not suitable for particular job 
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Lack of career progression opportunities in the organization 
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Poor working relationships between employees and manager 
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Unrealistic expectations from employee 
 
Unavoidable reasons of labour turnover:
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Illness 
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Accident 
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Family problems 
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Social issues 
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Retirement 

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F2 Management Accounting 
Page 33 of 147 
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Death 
Cost of labour turnover:
Labour turnover costs are very large and management should try to keep labour turnover as low as 
possible to minimize these costs. Labour turnover costs are divided into two categories: 
1. Replacement costs: 
Recruitment and replacement of staff will involve advertising, interviewing and 
selection which can be time consuming
 
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Additional cost of training new employees 
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Loss of efficiency due to new recruits learning the job 
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Adverse effect on morale of existing work force which can lead to de-motivated employees 
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Loss of profit due to delay in new labour becoming available 
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Increased wastage among new staff due to lack of expertise 
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Lower productivity level as new staff need time to get pace 
Therefore, labour turnover should be closely monitored and reduced if possible.