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# People in Business Measuring the Effectiveness of the Workforce

Measuring the Effectiveness of the Workforce In this topic you will learn about:

Labour

## turnover Labour productivity Absenteeism

Calculators needed!

Labour Turnover

Labour turnover

Labour turnover (staff turnover) can be defined as the rate of change in a firms 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?
Using

the formula :

## Do you think this is high or low?

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

Labour Productivity

## This can be measured in 2 ways.

Output per worker Labour costs per unit of output

1.

2.

## 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

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

## Summary of formulas needed:

Labour turnover

Labour Productivity
Labour productivity per worker

## = number of leavers p.a. x 100 Average number of employees p.a.

Absenteeism

Total value of Output Total Number of workers Labour cost per unit = Total Labour Cost Number of units produced

Number of staff absent per time period x 100 Total number of staff days worked per time period

## To improve the labour productivity of the workers?

To reduce the labour turnover statistics?

## Complete the Qs on Measuring staff productivity worksheet.

1.Labour Turnover for a double glazing company. It introduced a new training programme and bonus scheme in Year 2.

Year 1 Average number of employees Number of leavers Value of output Total labour costs Average number of staff absent on one day 42 3 1,500,000 948,000 5

## Year 4 43 2 1,800,000 962,400 1

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)

Homework.