positions. In connection with Table I this computation factor was arrived at by an actual census of the number of different persons who filled the positions. For lack of suitable records no such census could be made in connection with the study on which Table II is based. As a substitute the total of annual separations was taken. The method of computing the base (size of working force) for the labor-turnover calculations shown in Tables I and II is frequently impractical, for the reason that many establishments do not possess the requisite labor-hour records. The unsatisfactoriness of the labor-turnover computation formula shown in Table II is further increased by the fact that it is also based upon gross separations, irrespective of replacements. It is apparent, of course, that many separations, such as those due to reductions in the working force, were not subject to replacement and therefore constituted no labor turnover. The subject of the methods to be followed in computing labor turnover has frequently been discussed of late at meetings of local and national employment managers' associations and in industrial management publications such as Factory and Industrial Management. The National Conference of Employment Managers, held at Rochester, New York, May 9 to 11, 1918, adopted the following report on the standard definition of labor turnover and the method of computing the percentage of labor turnover.1 STANDARD DEFINITION OF LABOR TURNOVER AND METHOD OF COMPUTING THE PERCENTAGE OF LABOR TURNOVER Labor turnover for any period consists of the number of separations from service during that period. Separations include all quits, discharges, and lay-offs for any reason whatsoever. The percentage of labor turnover for any period considered is the ratio of the total number of separations during the period to the average number of employees on the force report during that period. The force report gives the number of men actually working each day as shown by attendance records. . . . . To compute the percentage of labor turnover for any period, find the total separations for the period considered and divide by the average of the A full statement of this report was published in the Monthly Review, U.S. Bureau of Labor Statistics, June, 1918, pp. 172-73. number actually working each day throughout the period. Then multiply by the proper factor to reduce to a yearly basis. . . . The method of computing percentage of labor turnover for one year, assuming that records of daily attendance are averaged for each month, is as follows: Total number of separations during the year. 5,020 Average number working each month as determined from the force reports or daily attendance records: In case the number employed by a plant or a department of a plant decreases because it is the deliberate policy of the plant management to reduce permanently its working force, this fact should be explicitly stated and the reasons for the reduction in force given. This method for computing labor turnover was used by the United States Bureau of Labor Statistics in some of its recent studies on labor turnover. The relative unsatisfactoriness of this method, however, is already being realized. The dissatisfaction centers on the point specifying separations, irrespective of their replacement, as one of the computation factors. Those objecting to the use of gross separations maintain that turnover does not begin to exist until the actual replacement of separations has occurred, and only to that extent. Three separate and distinct factors enter into the computation of labor turnover. These are: (1) the working force or number of positions, (2) the separations, and (3) the replacements. A brief discussion of the nature of each of these three factors and of the possible methods of measuring them will, it is hoped, throw some light on the question of definition and computation of labor turnover. 1 See Monthly Labor Review (October, 1918), p. 4; (January, 1918), pp. 11-29. 2 See symposium on "Computing Labor Turnover," Industrial Management (September, 1918), pp. 239-47. The majority of the contributors to this symposium appear to have realized the undesirability of basing turnover computations upon gross separations, as per specifications of the Conference of Employment Managers. 1. The working force.-An accurate measurement of the annual working force (the number of full-time positions) of any establishment is found by comparing the total annual hours of labor of the entire force with the total labor hours of one fully employed person. This method of measuring the size of the working force was used in connection with the studies some of the results of which were presented in Tables I and II. The method, though satisfactory from a scientific point of view, is frequently impractical, for the reason that many establishments do not keep labor-hour records. In the absence of such records the size of the working force may be arrived at in two distinct ways: (a) by computing the daily average pay-roll number, and (b) by computing the daily average number actually at work. The first method possesses a definite advantage and an equally definite disadvantage. Its advantage lies in its relative simplicity and in the fact that it is a familiar term to every employer. Its disadvantage arises from the fact that pay-roll records are seldom kept daily, and that, irrespective of the period covered, they almost invariably contain absentees and unrecorded separations. The difference between the daily average pay-roll number and average number actually at work amounts at times to 10 or 12 per cent. By taking the pay-roll average as the computation base one gets an inflated working force, that is, a working force nominally larger than it actually is. The inflation in the computation base diminishes the extent of labor turnover finally shown. The daily average number actually at work constitutes no doubt a more accurate measurement of the working force. Such an average, however, presupposes the existence of daily attendance records or force sheets, which frequently are not to be found. The above-mentioned Conference of Employment Managers agreed, however, to take the daily average actually at work as the correct base for computing labor turnover. The Federal Bureau of Labor Statistics, in compliance with this agreement, is using this base of labor-turnover computation at the present time. 2. Separations. Separations include all permanent detachments from service, irrespective of their replacement. Such separations are due largely to discharges, lay-offs, voluntary quits, deaths, etc., and in time of war, as during the past year, to entrances into military service. 3. Replacements.-A replacement is a separation for which a substitute is needed and hired. Frequently there is a considerable difference between the gross or total separations and what might be called the net separations, or separations actually replaced. In an expanding organization, when in addition to those being replaced new men are hired for newly created positions, the number of net or replaceable separations is equal to the total or gross number of separations. The situation is reversed when a reduction of force takes place. The extent of the replaced separations in such a situation is shown correctly by the number hired. Having arrived at a more or less definite idea of the nature of the three factors entering into the computation of labor turnover— the force, the separations, and the replacements-an attempt may be made to present a definite labor-turnover formula. In fact, two turnover formulas must be formulated, one to be used in instances of expanding organizations and the other when reductions in the working force take place. If the letter F is taken to denote the size of the force, S the extent of gross separations, H the number hired, and T the percentage of labor turnover, the formulas will be (a) T = H S F an organization which is reducing its force. It is apparent, of course, that in an organization remaining stationary the numerical strength of S and H are the same. In such instances either of the two formulas might be used. The essential importance of labor-turnover records arises out of the fact that turnover figures, if properly compiled, furnish an accurate means of gauging the relative soundness of the labor policies of the organization. A volume of turnover larger than the prevailing local average for the industry may indicate decided dissatisfactions with wages, working conditions, etc. A relatively low turnover may be said to indicate the opposite, that is to say, a fair degree of contentment among the employees. To be of practical value, labor-turnover figures should be compiled in a manner which will reveal the specific groups of employees: |