People in Business Measuring the Effectiveness of the Workforce

People in Business
Measuring the Effectiveness of
the Workforce
Measuring the Effectiveness of the Workforce
In this topic you will learn about:

Methods of measuring workforce
performance
 Labour
turnover
 Labour productivity
 Absenteeism
Calculators
needed!
Labour Turnover
3
Labour turnover

Labour turnover (staff turnover) can be
defined as the rate of change in a firm’s
labour force.

You need to know the following formula:
Number of staff leaving x 100
Total Number of staff
Labour turnover
Worked example:



A car firm has 1000 full time employees in 1
year
Of these, 50 employees leave the company
What is the labour turnover for the company?
Do you think this is high
or low?
 Using
the formula :
50
1000
x 100 =
5%
What are the advantages
of labour turnover?
What are the disadvantages
of labour turnover?
Labour turnover
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Labour Productivity
7
Labour Productivity

This can be measured in 2 ways….
1. Output per worker
2. Labour costs per unit of output
Labour productivity - output per worker

You need to know the following formula:
Total value of Output
Total Number of workers

We would look at labour productivity over
a period of time e.g. 1 year
Labour productivity
Worked example:



A car firm produces 100 000 cars per year
It has a labour force of 1000 workers
What is the labour productivity (output per
worker)
Using the formula then:
100 000
1000
=
100 cars per worker
Labour Productivity cost per unit

You will also need to be able to calculate
the financial aspect of labour productivity:

Labour Productivity cost per unit =
= Total Labour Cost
Number of units produced
Labour Absenteeism
12
Absenteeism

Absenteeism can be defined as the
number of staff who miss work as a
proportion of the total number of staff

You can use the following formula
Number of staff absent per time period
x 100
Total number of staff days worked per time period
Absenteeism
Worked example:
A car firm has 1000 full time employees
 Of these, 40 employees did not turn up for work
on a Friday
 What is the absenteeism rate for that Friday
Using the formula then:
40 x 100 =
4%
1000

You need to know
these formulas!
Remember to show formulas
as well as calculating the
answers
15
Summary of formulas needed:

Labour turnover

Labour Productivity

Labour productivity per
worker
 Absenteeism
Total value of Output
Total Number of workers
Labour cost per unit
= Total Labour Cost
Number of units produced
= number of leavers p.a. x 100
Average number of employees p.a.
Number of staff absent per time period x 100
Total number of staff days worked per time period
What can a Manager do….

To improve the labour productivity of the
workers?

To reduce the labour turnover statistics?

To reduce the number of absenteeism
days?
Your Task

Complete the
Q’s on
Measuring staff
productivity
worksheet.
Worksheet task……
1.Labour Turnover for a double glazing company. It introduced a new training programme and bonus scheme in Year 2.
Year 1
Year 2
Year 3
Year 4
Average number of
employees
42
41
42
43
Number of leavers
3
6
2
2
1,500,000
1,300,000
1,600,000
1,800,000
948,000
951,200
948,600
962,400
5
6
2
1
Value of output £
Total labour costs
Average number of
staff absent on one day
Questions….

Calculate the labour turnover for each year. ( 5 marks; 1 for formula and
1 x 4 per calculation)

Calculate the labour productivity per year, using the output per employee
formula. . ( 5 marks; 1 for formula and 1 x 4 per calculation)

Calculate the labour productivity using labour costs per unit method. . ( 5
marks; 1 for formula and 1 x 4 per calculation)

Calculate the percentage absenteeism rate for years 1 – 4. . ( 5 marks; 1
for formula and 1 x 4 per calculation)

How has the new training programme and bonus scheme affected the
performance of labour in the company? (10 marks; C = 3 A = 4 E = 3)