How to deal with Labour Turnover Appraisals and Recruitment

Your Favourite Coffee Shop Can't Keep Staff And What Amazon's Doing About It

Let's think about the following situation: You walk into your local Starbucks on a Monday morning, desperately needing that caramel macchiato to function like a normal human being, and there's another new barista struggling with the coffee machine. The regular who knew your order by heart? Gone. The manager that actually got you a couple of times out of trouble? Moved to a different branch. The whole team you'd got used to? Completely different faces.

Of course this entry is about labour turnover, and trust me, it's costing businesses a lot more than your £4.50 latte.

The Great Resignation Isn't Over (Sorry, Employers)

Here's a stat that'll make business owners feel slightly uncomfortable: 23% of UK workers are planning to quit their jobs in 2025. That's nearly one in four people actively plotting their escape from their current workplace. And if you think that's excessive, hospitality workers are leaving faster than people abandoned Twitter when it became X - the sector's currently experiencing a 52% turnover rate.

Replacing someone who earns £25,000 or more costs companies an average of £30,614. Yes, you read that right. That's like buying a pretty decent second-hand car every time someone hands in their notice.

So what exactly is labour turnover?

IB Business Management Labour Turnover

Labour turnover is essentially a measure of how many people are leaving your company each year. The formula's simple:

Labour Turnover = (Number of staff leaving per year ÷ Average number of staff) × 100

Let's say you run a retail shop with 50 employees, and 15 people quit over the year. Your labour turnover would be:

(15 ÷ 50) × 100 = 30%

Now, some turnover is inevitable and actually healthy. People retire, have babies, move cities, or get dream job offers they'd be mad to turn down. But when your turnover rate starts looking like a Premier League team's injury list, you've got problems.

Why Everyone's Leaving: The Six Deadly Sins of Employee Retention

The IB Business Management textbook lists causes of high labour turnover, but let me translate them into scenarios you'll actually remember:

1. An unhappy and discontented workforce

Imagine working somewhere where everyone's got a face like they've just watched England lose on penalties. Again. When workplace atmosphere is that off, people start updating their CVs faster than you can say "toxic workplace culture."

2. Better pay and working conditions offered by rival firms

Your mate texts you saying they're earning £5K more at a competitor for doing basically the same job. Are you staying? Didn't think so.

3. Employees being overwhelmed by the amount of work

When your daily to-do list is longer than a CVS receipt and your boss keeps piling on more, burnout isn't a possibility - it's inevitable.

4. Poor relationships with colleagues and/or managers

You know that feeling when your group project teammate does absolutely nothing and takes credit? Now imagine that's your manager. Every. Single. Day.

5. Staff being inadequately trained

Being thrown into a role without proper training is like being asked to drive a manual car when the closest you've been ro a road is on a 50cc bike. You'll feel incompetent, everyone else will be stressed, and something's definitely going to crash.

6. Toxic organisational culture

When the company culture is more toxic than a Year 11 group chat, talented people will bail. Currently, 62% of employees say poor work culture led them to quit their jobs. That's the biggest reason for resignations in recent surveys.

The Real Cost: Why High Turnover Hurts

When people keep leaving, businesses face:

- Massive recruitment costs: Job ads, agency fees, interview time - it all adds up

- Training expenses: Getting new employees up to speed isn't free, it costs time and money.

- Productivity black holes: New staff take time to learn the ropes, and during that period, they're not exactly hitting targets

- Management time drain: Your managers could be doing strategic planning and producing, but instead they're conducting endless interviews

- Continuity concerns: When half your team's new, who actually knows how things work?

A recent report found that for highly paid executive positions, replacement costs can hit a whopping 213% of their annual salary. So if your CEO on £100K leaves, you're potentially looking at £213K to replace them. That's enough to make any finance director depressed.

Amazon's Controversial Report Card: How The Big Players Are Judging You

Now that we've covered why people leave, let's talk about how companies decide who's actually doing a good job - and whose desk might have a cardboard box under it soon.

IB Business Management Types of Appraisal

An appraisal is basically a formal performance review where your boss assesses how well you're doing your job compared to your job description. However, it may seem simple enough but there's not just one way to do this.

Think of appraisals like phone updates: sometimes you get continuous small improvements, sometimes you get one massive annual overhaul that breaks everything, and sometimes everyone gets to have an opinion on what features should change. Experience says that in order to be effective, employee appraisals should take place, at least every three months.

Formative Appraisals: The Continuous Feedback Loop

Formative appraisals happen regularly - think weekly check-ins or monthly reviews. They're designed to help you improve as you go rather than finding out six months later that you've been doing everything wrong.

IB Business Management Real-life example: Google's famous for its continuous feedback culture, where managers have regular 1-on-1s with team members. It's less "here's your annual judgement day" and more "hey, let's chat about how things are going."

The point: These help identify strengths, weaknesses, and training needs before they become major problems. It's like getting spell-check suggestions as you type rather than discovering you've sent your teacher a presentation full of typos.

Summative Appraisals: The Big Yearly Event

Summative appraisals are the traditional annual or quarterly reviews where your line manager sits you down and basically tells you if you're doing alright or need to "develop your skill set" (translation: do better).

These evaluate your performance over a set period and compare it to benchmarks or standards. The problem? You might not find out about issues until months after they happened, which is about as useful as finding out your exam results a year later.

The controversy, IB Business Management Real-life example: Many tech companies are making these harder to pass. Google told employees in 2022 that more of them would be at risk for low performance ratings. Translation: we need to improve productivity even more, the bar's getting higher, and not everyone's going to clear it.

360-Degree Feedback: When Everyone Gets to Have a Say

360-degree feedback collects opinions about you from everyone you work with: your manager, your colleagues, the people you manage, even customers.

Over 85% of Fortune 500 companies use this system. Companies like Spotify, Amazon, Google – they're all in on it.

How it works: Usually through anonymous questionnaires and surveys. Your peers might say you're brilliant at problem-solving but terrible at replying to emails. Your direct reports might think you're supportive but need to make quicker decisions.

The advantage: You get a complete picture of your performance from multiple angles, not just your boss's perspective. It's like getting reviews from every member of your group project instead of just the teacher.

The controversy, IB Business Management Real-life example: Amazon's 360-degree-ish system has been called "predatory and opaque" by some employees. Their approach involves stack-ranking - forcing managers to categorise employees into five performance tiers with predetermined percentages. So even if everyone's doing well, someone has to be in the bottom tier. Similar to playing the old game musical chairs, but with your career.

Cultural concerns: In some cultures (particularly in parts of Asia), having junior staff formally appraise senior colleagues would be considered wildly inappropriate. Context matters!

Self-Appraisal: Time to Big Yourself Up (or Be Brutally Honest)

Self-appraisal involves you rating yourself against set criteria. You reflect on your strengths, weaknesses (sorry, "areas for development"), and set your own targets.

The issue: Most people either:

- Undersell themselves (very British of us)

- Massively oversell themselves (hello, that one teammate who claims they did everything)

That's why self-appraisals are usually combined with manager reviews to balance things out.

SMART Targets: Not Just an Acronym

All good appraisals should include target setting. These need to be SMART:

- Specific: "Improve customer service" is vague. "Reduce customer complaint resolution time from 48 hours to 24 hours" is specific.

- Measurable: You need actual numbers to track progress

- Achievable: Doubling sales in a week probably isn't happening unless you're dealing Glastonbury tickets in May

- Realistic: See above

- Time-bound: "Eventually" isn't a deadline; "by end of Q2" is

Important point for the IB Business Management exam: If someone's underperforming in their appraisal, the response should be training and support, not immediate warnings or dismissal. The goal is improvement, not punishment.

Finding Your Future Workforce: Why Robots Are Reading CVs and the Meaning of all this

Right, last topic: how businesses actually find and hire people in 2025. It's changed massively from the "print your CV and hand it in personally" days your parents remember.

The Recruitment Process: More Steps Than Your IB Business Management EE

Recruitment is the whole process of finding, selecting, and hiring employees. Here's how it typically works:

Step 1: Job Analysis - Working Out What You Actually Need

Before you can hire anyone, you need to figure out what the job actually involves. Job analysis identifies:

• Tasks and responsibilities

• Required skills and qualifications

• Working conditions

• Performance expectations

From this, you create two crucial documents:

Job Description: The what, where, and how of the role

• Job title

• Duties and responsibilities

• Who you report to

• Working hours and location

Person Specification: The ideal candidate profile

• Qualifications needed

• Experience required

• Skills and knowledge

• Personal attributes (team player, good communicator, etc.)

Step 2: Advertise and Attract Applications

Once you know what you need, you advertise. These days, most applications are online. 74% of hiring managers can now spot when AI has been used to write applications, so maybe don't let ChatGPT do all the work if you're applying for jobs soon.

Current trend: Companies are moving toward skills-based hiring rather than obsessing over degrees and traditional qualifications. In tech sectors especially, what you can do matters more than where you studied.

Candidates typically need to submit:

- Application form: Basic info and work history

- CV (Curriculum Vitae) or Résumé: Your educational achievements, work experience, skills, accomplishments, and sometimes hobbies

Pro tip from someone who's reviewed CVs: Keep it relevant. Nobody cares that you got a bronze swimming certificate when you were 7 unless you're applying to be a lifeguard.

Step 3: Shortlisting - The Brutal Culling

Shortlisting is when recruiters systematically eliminate unsuitable candidates to identify the few who best match the job description and person specification.

If 200 people apply and you can only interview 8, you need to be ruthless. Recruiters typically scan CVs for:

• Relevant qualifications

• Appropriate experience

• Required skills

• Red flags (unexplained employment gaps, dodgy email addresses like "partyanimal69@email.com")

Current reality: Average time to hire in the UK is 4.6 weeks (down from 5.1 weeks), suggesting companies are getting better at this process. Or more desperate. Possibly both.

Step 4: Testing - Proving You're Not Just Good at Interviews

Depending on the role, you might face various tests:

Aptitude Tests: Can you actually do the job?

• Typing speed for admin roles

• Driving tests for driver positions

• Coding challenges for programming jobs

• Deliver a live lesson for teachers

Psychometric Tests: Do you have the right personality and attitudes?

• How you handle stress

• Your level of motivation

• Whether you'll fit the company culture

• Used by companies to avoid hiring someone technically brilliant but who'll clash with the whole team

Trade Tests: Industry-specific skills assessments

• Mechanics might need to diagnose a car problem

• Chefs might need to cook a specific dish

• Graphic designers might need to create a sample logo

Intelligence Tests: General problem-solving abilities

• Numeracy and literacy

• Logical reasoning

• General knowledge

Step 5: Background Checks and References

Before making an offer, companies check you're not a total fantasist. Background checks verify:

• Your qualifications are real (yes, people do lie about degrees)

• Your work history is accurate

• You've got a decent character reference

• You don't have a criminal record (for certain roles)

Referees (usually your current or previous employer) confirm you're a functioning human who can actually do what you claim.

Step 6: The Job Offer and Contract

If you've survived all that, you get a job offer followed by a contract of employment setting out:

• Salary and benefits

• Working hours

• Notice periods

• Job responsibilities

• Company policies

The Million-Pound Question: Promote From Within or Hire Fresh Blood?

Right, so you've been through the whole recruitment process - job analysis, advertising, shortlisting, testing, interviews, the lot. Now comes the strategic decision that businesses often get wrong: do you promote someone who already works for you, or bring in someone completely new?

This isn't just an HR preference - it's a massive business decision that affects culture, costs, and whether your current employees think there's actually a point in working hard.

Internal Recruitment: Giving Your Team an Upgrade

Internal recruitment means filling vacancies by promoting or moving people who already work for you. It's most commonly used for supervisory and management positions - think of it as levelling up within the same game rather than switching to a completely different console.

IB Business Management Real-life example: At The Predictive Index (a US HR tech company), they promoted five top performers to product manager roles in 2020 specifically because these positions needed people with deep understanding of their business strategy. Makes sense, right? Hard to manage a product you don't actually understand yet.

Two-thirds of top executives are internal hires. So if you're eyeing the top-floor office someday, staying put and working your way up might actually be the move.

Why Internal Recruitment Shines (Advantages)

1. Lower risk - you already know them

Hiring someone internally is like dating someone you've been mates with for ages. You already know their weird habits, their work ethic, and whether they're actually reliable or just good at talking in interviews. No nasty surprises about them being a nightmare to work with.

Remember how 30% of external hires quit within the first 90 days? Yeah, internal candidates don't do that because they already know what they're getting into.

2. Cheaper than you'd think

External candidates get paid 18-20% more than internal candidates promoted to similar positions. So promoting your existing team lead to manager might cost you £40K, while hiring an external candidate for the same role could cost £48K. Plus, you're saving on:

• Job advertising costs

• Recruitment agency fees (which can be brutal)

• Extensive background checks

• Multiple rounds of interviews

3. Actually faster

Internal recruitment takes about 20 days on average. External recruitment? 49 days. That's more than double. When you need someone in post quickly because everything's on fire, promoting internally makes sense.

4. No lengthy induction needed

External hires need about two years to fully get up to speed with a new company. Internal candidates already know:

• How things actually work (not just how they're supposed to work)

• Who to talk to when you need something done

• The unwritten rules (like never scheduling meetings on Friday afternoon)

• The day to day company culture and values

5. Boosts morale and retention

Employees promoted within 3 years of being hired have a 70% retention rate. Those who aren't promoted? Only 35% retention.

When people see colleagues getting promoted, they think "That could be me if I work hard." When companies only hire externally, people think "What's the point? I'll never move up here" and start updating their LinkedIn accounts.

Current reality: Lack of career growth is literally one of the top reasons people quit jobs. If you want to keep your good people, you need to show them there's somewhere to go.

Why Internal Recruitment Can Be Awkward (Disadvantages)

1. "Dead wood" and stale ideas

When everyone's been there forever, you get stuck in the "but we've always done it this way" mentality. It's like when your parents refuse to learn new technology because "the old way works fine."

External candidates bring fresh perspectives, new ideas, and different experiences. Sometimes you need someone to walk in and go "Wait, why on earth are you doing it like that?"

2. External candidates might simply be better

Just because Sarah from accounting has worked here for 5 years doesn't mean she's the best person for the finance manager role. Maybe there's someone out there with an MBA, 10 years' experience, and actual expertise in the exact area you need.

3. Smaller talent pool = fewer options

If you've only got 50 employees and you need a new head of marketing, you're choosing from maybe 3-4 internal candidates max. Cast the net externally and you might get 200 applicants, including some absolute gems simply looking for an opportunity.

4. Creates internal beef

You and your mate both apply for the same promotion. One of you gets it. Now one person's the boss and the other's... not. Awkward doesn't even begin to cover it.

This can create:

• Resentment from people who didn't get promoted

• Tension between former equals

• The classic "they only got it because they're mates with the boss" accusations

• People quitting because they're annoyed

5. The vacancy chain problem

Internal recruitment may seem at times less efficient than it really is. When you promote someone, you've created a new vacancy in their old job. So now you need to fill that position. And if you promote someone into that role, you've created another vacancy. Similar to reverse Tetris - instead of filling gaps, you're creating them. That is a lot of recruiting and re-adjusting waiting to be done.

Eventually, you're going to need to hire externally anyway to fill that bottom-level vacancy.

External Recruitment: Fresh Meat (And Fresh Ideas)

External recruitment means going out into the big wide world to find candidates. You're advertising on job sites, using recruitment agencies, and hoping someone brilliant applies.

How it works nowadays: Job ads on LinkedIn, Indeed, company websites, specialist trade magazines. For senior positions, companies often use recruitment agencies who handle everything (and charge 15-25% of the first year's salary for their trouble - ouch).

The advantages and disadvantages of external recruitment are basically the mirror image of internal recruitment's pros and cons. But let me highlight the key points:

Why External Recruitment Can Be Brilliant

Fresh perspectives and innovation

When your industry's changing fast or your company's struggling, bringing in someone from outside can be the "shot in the arm" you need. They will try hard, they'll question everything, suggest improvements, and bring ideas from their previous companies.

Access to a massive talent pool

Instead of choosing from 5 internal candidates, you get 200+ external applications. The odds of finding the perfect fit are way higher.

Specific skills and experience

Sometimes nobody internal has the skills you desperately need. If you're a traditional retailer trying to build an e-commerce platform, you probably need someone who's actually done that before, not your current staff learning on the job.

No internal politics baggage

External hires come in with a clean slate. They're not caught up in historical office politics, past feuds, or "that time we tried this and it failed."

Why External Recruitment Can Be a Nightmare

Cultural mismatch

You think you've hired the perfect candidate. Day 1, they show up and their working style clashes completely with your company culture. Maybe they're super formal and your office is casual. Maybe they're used to working independently and your team's very collaborative.

Remember those 30% of new hires who leave within 90 days? Often it's because the culture fit just wasn't right.

Terribly Expensive Experience

• Higher salaries (that 18-20% premium)

• Recruitment agency fees

• Advertising costs

• More extensive interview processes

• Background check costs

• Longer onboarding and training

For senior positions, total costs can be 6-9 months of their salary. Absolutely insane costs.

Takes forever

49 days average to hire externally vs 20 days internally. When you need someone yesterday, that's a problem, a real problem.

Uncertainty and risk

All you've got to judge them on is:

• A CV (which might be real or exaggerated)

• An interview (where they're on their best behaviour)

• Maybe some work examples

You don't really know them until they've been working for you for months. It's like buying a used car based on a 10-minute test drive - sometimes you get a gem, sometimes you get a lemon.

The Strategic Decision: Which Do You Choose?

Smart companies use a mix of both:

• Internal recruitment for roles requiring deep company knowledge

• External recruitment when you need fresh ideas or specific skills

• Internal promotion for mid-level positions, external hiring for entry-level roles (so you're always bringing in new talent at the bottom)

Current trend: Many successful companies are promoting internally for senior roles but hiring externally for entry-level positions. This means they're developing their own talent and constantly refreshing their team with new perspectives.

The worst thing you can do? Always hire externally. Your current employees will lose motivation, retention will tank, and you'll be constantly dealing with new people who don't understand how anything works.

What's Actually Happening in 2025: IB Business Management Real-life examples

On Turnover:

- UK retail workers are leaving faster than the queue at the post office when someone tries to send an international parcel

- The manufacturing industry, surprisingly, has the best retention with employees staying an average of 5.3 years

- Marketing, hospitality, and IT have the worst retention (hospitality workers are basically just passing through at this point)

On Appraisals:

- Amazon's forcing managers to rank employees in fixed percentage brackets, meaning someone's got to be bottom tier even if everyone's being extremely productive

- Google and Amazon are both sweetening compensation for top performers while raising standards for everyone else - basically creating a performance olympics

- The tech industry's getting stricter with reviews after years of rapid growth and high salaries

On Recruitment:

- 68% of UK tech professionals are actively looking for new jobs right now - if you're in tech, you've got options

- AI, cybersecurity, and cloud computing roles are absolutely booming

- Hybrid/remote work is now the standard, not a perk. Companies forcing full-time office returns are seeing people quit in droves

- Skills-based hiring is replacing the obsession with degrees - what you really can do > where you studied

- Two-thirds of top executives are internal hires - promoting from within is the dominant strategy at senior levels

- However, external hires are paid 18-20% more than internal promotions for similar roles (companies literally pay a premium for outside talent)

- Internal recruitment takes 20 days vs 49 days for external hiring - speed matters when roles are urgent

What You Actually Need to Remember for Your IB Business Management Exam

Labour Turnover:

• Formula: (Staff leaving ÷ Average staff) × 100

• Some turnover is inevitable and normal

• High turnover costs companies massive amounts through recruitment, training, and lost productivity

• Main causes: poor management, low pay, toxic culture, inadequate training, work overload

• Businesses must balance cost of retention programs against cost of high turnover

Types of Appraisal:

• Formative: Ongoing feedback to enable improvement as you go

• Summative: Periodic evaluation (quarterly/annual) comparing performance to standards

• 360-degree: Feedback from everyone (managers, peers, subordinates, customers)

• Self-appraisal: Employee evaluates themselves (usually combined with manager review)

• All appraisals should include SMART targets

• Poor performance should trigger training/support, not immediate punishment

Recruitment Methods:

• Job analysis creates the job description and person specification

• Shortlisting systematically eliminates unsuitable candidates

• Testing can include: aptitude, psychometric, trade, and intelligence tests

• Background checks verify qualifications and character

• Modern trends: online applications, AI screening, skills-based hiring, remote working

Internal vs External Recruitment:

- Internal recruitment: Hiring from within the organisation (usually for supervisory/management roles)

- Internal advantages: Lower risk, cheaper, faster, no induction needed, boosts morale and loyalty

- Internal disadvantages: Limited talent pool, potential for stale ideas, creates internal competition, still leaves a vacancy to fill

- External recruitment: Hiring from outside the organisation through job ads and recruitment agencies

- External advantages: Fresh perspectives, larger talent pool, access to specific skills, no internal politics baggage

- External disadvantages: Cultural mismatch risk, more expensive, takes longer, higher uncertainty

- Smart companies use a strategic mix of both depending on the role and circumstances

The Bottom Line for your IB Business Management Course

Managing people is hard. Keeping them is expensive. Assessing them fairly is complex. And finding good ones in the first place requires proper systems and processes.

But here's what makes this IB Business Management Higher Level content so valuable: understanding these concepts means you can analyse real business situations in your exams. When a case study mentions "high staff turnover," you'll immediately think about the hidden costs and strategic implications. When they describe an appraisal system, you'll be able to evaluate its effectiveness and cultural appropriateness. When recruitment challenges are mentioned, you'll connect them to labour turnover, organisational culture, and business performance.

In a few years when you're the one being appraised or doing the hiring, you'll actually understand what's happening and why. And trust me, that's worth more than knowing the formula.

Now, if you'll excuse me, I need to go write a SMART target about finishing my marking before my summative appraisal with my line manager. Pray for me...not.

Want more real-world IB Business Management content that doesn't put you to sleep? Check out our other posts on organisational culture, motivation theories, and why understanding HRM could literally help you get (and keep) a better job someday.

Exam tip: These HL topics are examiner favourites for 12-mark analysis questions. Practice applying these concepts to case studies, not just memorising definitions. The IB values application over repetition.

Stay well,