Human Resources

• Businesses commonly monitor the following human resources metrics:

  • Labour productivity
  • Labour turnover
  • Labour retention
  • Absenteeism
• • Labour productivity is a measure of output per employee
  • Businesses aim to increase the level of labour productivity to improve competitiveness
  • Equation:

  -> Total output/average number of employees
• • Labour turnover measures the proportion of employees leaving a business during a specific time period
  • It is expressed as a percentage and is calculated using the formula:

  -> Number of staff leaving/average number of staff X 100
• Problems with high labour turnover:

  • Increased recruitment and selection costs
  • Increased induction and training costs
  • Lower productivity levels as workers settle into new roles
• Opportunities with High labour turnover:

  • Workers with existing skills can be recruited to reduce the need for training
  • New ideas and creativity introduced to the business
  • New perspective and approaches to problem-solving can improve business performance
• Labour Retention

  • Labour retention measures the proportion of employees remaining with a business during a specific time period
  • A high level of labour retention means that few staff are leaving the business during a given period
  • Equation:

  -> Number of staff remaining/total number of staff X 100
• • Absenteeism rate is a measure of the proportion of staff were absent from work during a specific period of time High levels of absenteeism can cause several problems:
  • Absence due to illness requires sick pay to be paid
  • Hiring temporary staff to cover for those absent increases costs
  • Output is likely to be temporarily reduced
  • Equation:
  • Number of staff absent/number of staff employed X 100
• Human Resources Strategies to Improve Employee Performance:

  • Offering financial rewards 
  • Offering employees shares in the company 
  • Consultation
  • Empowerment