OR XYZ Ltd. is experiencing a high rate of employee turnover in its production department, resulting in increased training costs, recruitment…

(a) OR Two types of costs which are associated with employee turnover are: (a) Preventive Costs: The cost incurred to prevent employee turnover or keep it as lowest as possible. Cost incurred for prevention of employee turnover includes the following: (i) Cost of medical benefit provided to the employees; (ii) Cost incurred on employees' welfare like pension etc. (iii) Cost on other benefits with an objective to retain employees. (b) Replacement Costs: These are the costs which arise due to employee turnover. If employees leave soon after they acquire the necessary training and experience of good work, additional costs will have to be incurred on new workers, i.e., cost of recruitment, training and induction, abnormal breakage and scrap and extra wages and overheads due to the inefficiency of new workers.