Reducing workforce turnover in Asian factories using a mixed‐mode modelling approach

While many studies have been conducted into labour productivity in Western countries, similar analysis is just beginning in their Asian counterparts. In this paper, the problem of workforce turnover is examined in the context of three case study companies (two Chinese and one Singaporean), all being outsource suppliers of manufactured products with relatively similar cultural and environmental influences. The cost of turnover is examined through a simple costing model that includes the indirect effects of lower‐output rate and increased scrap because of worker inexperience, as well as the well‐recognised direct costs. In addition, the model used extends the costing analysis by recognising the multiplier impact on the value‐added lost by this inexperience. Having established the significance of the cost of workforce turnover on the performance of the companies studied, company data were utilised to undertake an analysis of the causes of the turnover to be undertaken, bearing in mind the existing findings reported in Western case studies. While the core reasons for the workforce turnover in the factories studied are consistent with findings elsewhere in the world, the weightings of individual contributing factors vary. This understanding provides the foundations for the development of proactive programs to reduce the incidence of labour turnover in the Asian context, thereby leading to considerable cost savings and other competitive benefits.