3.5.3 Human Resources

Analysis of Human Resource Measures

Labour Retention

🔗 The proportion of staff staying with a business over a period of time.

Issues with High Retention

• High overheads
• Workers may get too comfortable and slack off -> Lower productivity

Labour Turnover

🔗 Proportion of staff leaving a business over a period of time

Issues with High Turnover

• Expensive
• Bad PR
• Disruption to production (new employees lack experience)
• Takes time to adjust to drastic change

Factors Affecting Retention and Turnover

• Corporate culture
• Cost management (business cutting costs or not)
• Level of motivation
• Substitutability of wages (better jobs elsewhere)

Labour Productivity

🔗 Comparing workers to output.

Reasons for Low Productivity

• De-motivated staff
• Poor management -> Confusion and therefore slows down production
• Poor training

How Productivity Can Be Improved

• Financial incentives for employees
• Invest in capital machinery

Absenteeism

🔗 Staff absence compared to business' time of operation

Causes of Absenteeism

• Illness
• Striking
• Poor working culture
• Big events/shocks (E.G World Cup)

Problems with Absenteeism

• High staff turnover
• Low capacity utilisation
• Disruption to production -> Other employees being allocated more responsibility. Could be too much

How absenteeism can be reduced

• Strict disciplinary policy
• Ensure the employee is committed
• Punishment
• Motivate employees to prevent refusal to work
• Consulting workers take their perspective into account -> Makes them feel valued by the business -> Increases motivation -> Higher productivity/better customer service
• Lay off workers to prevent knock-on effect

Human Resource Measures

🔗 Human resources – The personnel of a business that is regarded as an asset to business operations.

Labour Retention

🔗 The proportion of staff staying in a business over a period of time (per period)

Formula

(Number of staff remaining/average number of people employed during the time period) x 100

Labour Productivity

🔗 Comparing workers to output (per period)

Formula

$$Total output/average number of people$$

📝 Example

18 cleaners cleaning 140 offices per day

140/18 = 7.7 offices -> 8 offices per worker

Labour Turnover

🔗 Proportion of staff leaving a business over a period of time (per period)

Formula

(Number of staff leaving/average number of employees) x 100

📝 Example

The average number of people employed over the last 12 months is 80, with 15 staff leaving

15/80 x 100 = 18.75% labour turnover

Absenteeism

🔗 Comparing staff absence to the business' time of operation

Formula

(Number of staff days absent during time period/total potential working days x 100

• Multiply working days by staff in order to get the total days absent of all staff.
• This is because for example, if 2 employees miss a day of work without multiplying the working days and staff, this would be classed as two absent days rather than one day of two absentees.

📝 Example

18 cleaners, 220 working days, 195 days absent

18 x 220 = 3960

195/3960 x 100 = 4.92%