20: Measuring the effectiveness of the workforce Flashcards
Workforce performance:
Methods of measuring the effectiveness of employees including labour productivity, staff turnover and absenteeism.
Labour Turnover
Percentage of the total workforce who leave in any given time period (e.g. one year).
= Number of leavers per year/average number of employees per year X 100
Why should labour turnover be calculated?
Most businesses would be concerned if the rate of labour turnover was rising, because that would suggest that a growing number of employees were dissatisfied with their current position.
Labour productivity
The output per employee over a given time period.
Total output in given period/number of employees
Labour cost per unit of output:
Total labour costs/total output in time period.
UK productivity:
Total value of UK output/ Total number of hours worked.
Why should labour productivity be calculated?
In a competitive market, a business needs to be sure that it is using its resources efficiently. If the output per employee is falling, this suggests that there is room to improve efficiency.
It could be that employees need specific training, or that the payment system needs to be revised in order to improve motivation.
Absenteeism
The number of working days lost as a result of an employee’s deliberate or habitual absence from work.
Average number of staff absent on one day/Total number of staff X 100
Why should absenteeism be calculated?
High or rising absenteeism represents a cost to the business, and as such should be investigated.
The importance of workforce measures:
For any organisation it is important to monitor changes over time so that efficiency and effectiveness can be evaluated. The information gathered about employees can be compared to data from previous years and other businesses or sectors to judge whether or not policies and procedures are working.
