Topic 6 HRM miss Flashcards
What does HR performance measure (5)
- labour productivity
- employee costs as a percentage of turnover
- labour cost per unit
- labour turnover
- employee retention rate
What is labour productivity
It compares the number of workers with the output of the business
Labour productivity equation
Output per time period
_________________________
Number of employees
Labour productivity
In order to remain competitive …
A business needs to keep its unit costs down
Key factors that influence the level of labour productivity (6)
- fixed assets
- workforce
- methods of ..
- training
- other factors
- competition
- extent and quality of fixed assets
- skills, ability and motivation of the workforce
- methods of production organisation
- extent to which the workforce is trained and supported
- external factors
- degree of competition
Approaches to improve labour productivity (4)
- measure …
- invest in ..
- improve ..
- training
- measure performance and set targets
- invest in capital equipment (automation)
- improve working conditions
- invest in employee training
Issues when trying to raise labour productivity (3)
- quality
- employee resistance
- higher pay
- quality may suffer-higher output must still be of the right quality
- potential for employee resistance- depending on the methods used (new technology)
- employees may demand higher pay for their improved productivity (impacts labour cost per unit)
What is absenteeism/ labour turnover
An employee’s intentional or habitual absence from work
Labour turnover formula (employee)
Number of staff absent during period
______________________________ X 100
Number employed during period
labour turnover formula (days off)
Number days taken off for unauthorised absence (during period)
___________________________ X100
Total days worked by workforce over the period
Employee costs as a percentage of turnover
Formula
Employee costs
_________________ X100
Sales turnover
Employee costs as a percentage of turnover
A high figure …
Can show the impact of inefficiency e.g. less productive staff, lower sales, higher wage costs as a percentage of sales
Employee costs as a percentage of turnover
However, a high percentage …
Could be an indication of mire staff/better service in a service sector organisation
Labour costs per unit
Formula
Labour costs
______________
Units of output
Labour costs per unit
If labour cost per unit is higher …
Lower profit margins will be made
Labour costs per unit
Lower labour costs per unit …
Will allow a firm to be more competitive
Internal causes of labour turnover (3)
- poor recruitment processes (wrong staff selected)
- ineffective motivation or leadership
- wage levels lower than other firms
External factors of labour turnover (2)
- more local vacancies
- better transport
Negative of labour turnover (4)
- cost of recruitment
- cost of training
- time taken for new staff to settle
- loss of productivity while new workers learn
Positive of labour turnover (3)
- new workers with ideas and enthusiasm
- workers bring new skills
- new ways ti solve problems
Employee retention formula
Number of employees at the end of period — number of leavers
___________________________ X100
Number of employees at the end of period
To assess performance good managers analyse …. (3)
- changes over time
- comparisons with other firms
- performance against targets
What does hierarchy mean
Number of layers within an organisation
What is a span of control
The number of subordinates for whom a manager is directly responsible
What does a suitable span of control depend on: (4)
- experience and personality of manager
- nature of business
- skills and attitudes of employees- highly skilled workers may not need close supervision
- tradition and culture of organisation e.g. democratic leadership will empower workers so a wide span of control
3 features of a narrow span of control
- allows for closer supervision of employees
- more layers in the hierarchy may be required
- helps more effective communication
2 features of a wide span of control
- gives subordinates the chance for more independence
- more appropriate if labour costs are significant-reduce number of managers
What is a chain of command
The lines of authority within the business
Features of a tall structure (5)
- many layers if hierarchy + narrow spans of control
- allows tighter control (less delegation)
- more opportunities for promotion
- takes longer for communication to pass through layers
- more layers = more staff= higher costs
Features of a flat structure (5)
- few layers of hierarchy + wide spans of control
- less direct control + more delegation
- fewer opportunities for promotion, but staff given greater responsibility
- vertical communication
- fewer layers = less staff = lower costs
What is delegation
The assignment to others of authority for particular functions, tasks and decisions
5 advantages of delegation
- reduces management stress and workload
- allows senior management to focus on key tasks
- subordinates are empowered and motivated
- better decisions or use of resources
- good method of on-the-job training
4 disadvantages of delegation
- cannot/ should not delegate responsibility
- depends on quality/ experience of subordinates
- harder in smaller firms
- may increase workload and stress of subordinates
4 benefits of delayering
- lower management costs
- faster decision making
- shorter communication paths
- stimulating employee innovation
2 disadvantages of delayering
- wider spans of control
- potential loss of management expertise
What is delayering
Removing a layer of management
What is centralised decision making
Keeping decision making at the top of the hierarchy
Advantages of centralisation (4)
- independence
- coordinate
- costs and savings
- decision making
- prevents other parts of the business from becoming too independent
- easier to co-ordinate and control from the centre
- economies of scale and overhead savings easier to achieve
- quicker decision making- easier to show strong leadership
Disadvantages of centralisation (3)
- more layers
- lack of authority
- customer service
- more bureaucratic- often extra layers in the hierarchy
- lack of authority down in the hierarchy may reduce manager motivation
- customer service does mis ls flexibility and speed of local decision making
What is decentralised decision making
Decision making is spread out to include more junior managers in the hierarchy, as well as individual business units or training locations
Advantages of decentralisation (6)
- decisions
- responding
- improved
- consistent
- training
- motivation
- decisions are made closer to the customer
- better able to respond to local circumstances
- improved level of customer service
- good way of training and developing junior management
- should improve staff motivation
Disadvantages of decentralisation (4)
- decision making
- practices
- economies of scale
- financial control
- decision making is not necessarily ‘strategic’
- harder to endure consistent practices and policies at each location
- may be some diseconomies of scale
- harder to achieve tight financial control- risk of cost overruns
