HR Performance
KEY MEASURES OF HR PERFORMANCE
- Labour turnover & staff retention - percentage of staff who leave
during a period
- Labour productivity - output per employee
- Absenteeism - percentage of staff who are absent from work
LABOUR PRODUCTIVITY:
- Labour costs are usually a significant part of total costs.
- Business efficiency and profitability are closely linked to productive
use of labour.
- In order to remain competitive, a business needs to keep its unit
costs down.
- Labour productivity is calculated using this formula:
- Output per period / number of employees at work
- The answer from the formula is usually expressed in terms of output
per employee
Employees Labour costs Output Output per Labour cost
(£) (units) employee per unit (£)
10 100 000 2 000 200 50
20 200 000 5 000 250 40
30 300 000 10 000 333 30
40 400 000 20 000 500 20
50 500 000 30 000 600 17 (16.6)
- Higher labour productivity = Lower labour costs per unit
KEY FACTORS INFLUENCING LABOUR PRODUCTIVITY:
- Extent and quality of fixed assets (e.g., equipment, IT systems)
- Skills, ability and motivation of the workplace
- Methods of production organisation
- Extent to which the workforce is trained and supported (e.g.,
working environment)
- External factors (e.g., reliability of suppliers)
HOW COULD PRODUCTIVITY BE IMPROVED?
- Higher wage - (AD) employees will be more motivated (DISAD) will
increase total costs
- More training - (AD) improving mental clarity (DISAD) time-
consuming
KEY MEASURES OF HR PERFORMANCE
- Labour turnover & staff retention - percentage of staff who leave
during a period
- Labour productivity - output per employee
- Absenteeism - percentage of staff who are absent from work
LABOUR PRODUCTIVITY:
- Labour costs are usually a significant part of total costs.
- Business efficiency and profitability are closely linked to productive
use of labour.
- In order to remain competitive, a business needs to keep its unit
costs down.
- Labour productivity is calculated using this formula:
- Output per period / number of employees at work
- The answer from the formula is usually expressed in terms of output
per employee
Employees Labour costs Output Output per Labour cost
(£) (units) employee per unit (£)
10 100 000 2 000 200 50
20 200 000 5 000 250 40
30 300 000 10 000 333 30
40 400 000 20 000 500 20
50 500 000 30 000 600 17 (16.6)
- Higher labour productivity = Lower labour costs per unit
KEY FACTORS INFLUENCING LABOUR PRODUCTIVITY:
- Extent and quality of fixed assets (e.g., equipment, IT systems)
- Skills, ability and motivation of the workplace
- Methods of production organisation
- Extent to which the workforce is trained and supported (e.g.,
working environment)
- External factors (e.g., reliability of suppliers)
HOW COULD PRODUCTIVITY BE IMPROVED?
- Higher wage - (AD) employees will be more motivated (DISAD) will
increase total costs
- More training - (AD) improving mental clarity (DISAD) time-
consuming
