Redundancies now at levels not seen since 2009

Redundancies now at levels not seen since 2009

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Redundancies now at levels not seen since 2009: Mercer Report

  • 03 December 2013
  • Australia, Melbourne
  • 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 high redundancy rate
     

Involuntary turnover, or redundancy levels, amongst Australian organisations, has increased across all industries to rates not seen since 2009 whilst voluntary turnover has dramatically slowed according to a recent report from Mercer. 

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

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.

“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 as 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 Mr Adams.

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 Mr Adams.

For further information or to arrange an interview with Garry Adams on the report findings, please contact Bronte Tarn-Weir.

Notes to Editor

About Mercer’s Human Resource Effectiveness Monitor (HREM) report
Mercer’s HREM brings together financial and employee metrics that enable organisation’s to assess the effectiveness of workforce management practices. The data contained in to the HREM was collected between August and September 2013 for the reporting period 1 July 2012 to 30 June 2013. The information comes from a variety of organisations, across a range of industries and sectors and covers over 160 benchmarks in 11 key areas:

  • Performance measures
  •  Overtime
  • Function budgets
  •  Recruitment measures
  • Staffing ratio's
  •  Salary & benefits cost
  • Staff turnover 
  •  Workforce planning & composition
  • Training measures
  •  Parental leave measures
  • Leave, unscheduled absences

       and lost time occurrences

 

About Mercer

Mercer is a global leader in talent, health, retirement and investments. Mercer helps clients around the world advance the health, wealth and performance of their most vital asset – their people. Mercer’s 20,000 employees are based in 43 countries and the firm operates in over 140 countries. Mercer is a wholly owned subsidiary of Marsh & McLennan Companies (NYSE: MMC), a global team of professional services companies offering clients advice and solutions in the areas of risk, strategy and human capital. With 55,000 employees worldwide and annual revenue exceeding $12 billion, Marsh & McLennan Companies is also the parent company of Marsh, a global leader in insurance broking and risk management; Guy Carpenter, a global leader in providing risk and reinsurance intermediary services; and Oliver Wyman, a global leader in management consulting. Follow Mercer on Twitter @MercerAU @MercerInsights

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