analysing hr perfromance

• Business needs reliable data on which to base decisions about the efficiency and cost effectiveness of human resources
• When collecting and analysing HR data its important to strike a balance between the hard quantitative data and soft qualitative
• Key hard measures

  • Labour productivity
  • Labour retention
  • Employee costs as a % of turnover
  • Labour costs per unit
• Labour productivity

  Output per worker over a given period of time
• Calculating labour productivity

  Output per period/number of employees
• Labour productivity

  • Shows average number of product produced per worker
  • Useful to compare to other years to see if there is additional output or compare against other firms
• Labour turnover

  Proportion of staff leaving the business over a period of time
• Calculating labour turnover

  Number leaving during the year/ average workforce x 100
• Problems of high turnover

  • Higher costs to recruit and train new employees
  • Pressure on remaining employees to perform
  • Disruption to production
  • Hard to maintain quality standards
• Factors that affect staff turnover

  • Type of the business- seasonal staff turnover(holiday parks)
  • Pay and other rewards
  • Working conditions
  • Economic conditions-downturn leads to lower staff turnover as there aren't as many opportunities
• Ways to improve staff turnover


  • Effective recruitment and training-recruit the right staff and do your best to keep them
  • Competitive pay
  • Job enrichment
• Labour retention

  Number of employees with more than one year of service
• Calculating labour retention

  Number of employees with more than one year/overall workforce x 100
• High level of labour retention

  • Indicates high satisfaction
• Advantages of high labour retention

  • Keeps the skills and knowledge employees build up over time
  • Saves money in the recruitment process
  • Experienced staff can improve labour productivity
• Possible disadvantages of high labour retention

  • Difficulties in implementing change in working practices-resistant to change
  • Higher costs in redundancy payouts
• Employee costs as a % of turnover

  Employee costs/sales turnover x 100
• Labour cost per unit

  Measures how much it costs to produce one unit of output
• Calculating labour cost per unit

  Labour costs/output
• Labour cost per unit

  • Useful measure as business can track staff efficiency
  • Investigate reasons behind increase/decrease
  • Improve unit costs by reducing labour costs or increasing productivity
• Ways HR data can help the business plan

  • Identifying future skills shortages
  • Identifying compliance issues
  • Legal changes
  • Identifying diversity issues
  • Succession planning to ensure new mangers are identified and developed
  • Maintaining good employee relations