Aqa bus2-peopleworkforceeffectiveness

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  • 1. Main Measures of Employee Effectiveness Absenteeism Percentage of staff who are absent from work Labour Productivity Output per Employee Staff Turnover Percentage of staff who leave during a period
  • 2. Staff Turnover
  • 3. Measuring Workforce Effectiveness
  • 4. What this topic is about
    • Methods of measuring workforce effectiveness
    • Calculation and interpretation
    • Measures to improve workforce effectiveness
  • 5. Employee Retention
    • All businesses lose staff
      • Retirement / Maternity / Death / Long-term Illness
      • Unsuitability
      • Changes in strategy (e.g. closure of locations)
    • Staff turnover needs to be managed if the business is to succeed
    • Employee retention = the ability of a business to convince its employees to remain with business
  • 6. What is Labour Turnover? The percentage of the workforce (employees) that leave a business within a given period (usually a year)
  • 7. Labour Turnover Formula Labour turnover is calculated using this formula: Number of employees leaving during period Average number employed during period X 100
  • 8. Labour Turnover Example Surridge Porridge is a manufacturer of breakfast cereals. In 2008 it employed an average of 80 staff. During 2008, the business recruited 12 staff to replace 15 who left. = 18.75% Labour turnover = Number of employees leaving (15) Average number employed (80) X 100
  • 9. Problems of High Staff Turnover
    • Higher costs
      • Increased recruitment & training costs
    • Increased pressure on remaining staff
    • Disruption to production / productivity
    • Harder to maintain required standards of quality and customer service
  • 10. Factors that Affect Staff Turnover (1)
    • Type of business
      • Some businesses have seasonal staff turnover (e.g. holiday parks)
      • Some businesses employ many temporary staff (e.g. hotels)
    • Pay and other rewards
    • Working conditions
    • Opportunities for promotion
    • Competitor actions
    • Standard of recruitment
  • 11. Factors that Affect Staff Turnover (2)
    • Quality of communication in business
    • Economic conditions
      • Downturn often leads to lower staff turnover
      • Buoyant economy – staff more likely to leave
    • Labour mobility
      • How transferable are staff skills
      • What other jobs are available?
    • Employee loyalty
  • 12. Ways to Improve Staff Turnover
    • Effective recruitment and training
      • Recruit the right staff
      • Do all you can to keep the best staff (role for training & other motivation tools)
    • Provide competitive pay and other incentives
      • Competitive pay levels & non-financial benefits
    • Job enrichment
    • Reward staff loyalty
      • Service awards, extra holiday etc
  • 13. Why Labour Productivity Matters
    • Labour costs are usually a significant part of total costs
    • Business efficiency and profitability closely linked to productive use of labour
    • In order to remain competitive, a business needs to keep its unit costs down
  • 14. Labour Productivity
  • 15. Factors influencing labour productivity
    • Extent and quality of fixed assets (e.g. equipment, IT systems)
    • Skills, ability and motivation of the workforce
    • Methods of production organisation
    • External factors (e.g. reliability of suppliers)
  • 16. Labour Productivity Formula Labour productivity is calculated using this formula: Output per period (units) Number of employees at work The answer from the formula is usually expressed in terms of output per employee e.g. 1,000 units per employee
  • 17. Labour Productivity Example (1) Marcouse Plastics makes 5,000 widgets each month. Total monthly labour hours are 1,250. What is labour productivity (hours per unit)? = 0.25hrs / unit Labour productivity = Labour hours per month (1,250) Units produced per month (5,000)
  • 18. Ways to Improve Labour Productivity
    • Measure performance and set targets
    • Streamline production processes
    • Invest in capital equipment (automation + computerisation)
    • Invest in employee training
    • Make the workplace conducive to productive effort
  • 19. Absenteeism
  • 20. Absenteeism Formula (1) Absenteeism calculated using this formula: Number of staff absent during period Number employed during period X 100
  • 21. Absenteeism Formula (2) Number days taken off for unauthorised absence (during period) An alternative formula uses the total number of days worked over a period (usually a year) Total days worked by workforce over the period X 100
  • 22. Comments on Absenteeism (1)
    • A significant business cost
      • Sickness absence costs UK businesses around £600 for each worker per year (BusinessLink)
    • Key to understand reasons (genuine / not)
      • Genuine sickness, bereavement, bullying, stress
      • Some employees simply “playing the system”
    • Often predictable
      • Monday / Friday or End of Shift Pattern
      • Main holidays
  • 23. Tackling Absenteeism
    • Understand the causes
    • Set targets and monitor trends
    • Have a clear sickness & absence policy
    • Provide rewards for good attendance
    • Consider the wider issues of employee motivation
  • 24. Absenteeism Example Anderton Alarms employs 20 staff and makes ready-meal pies for supermarkets. In 2008, the total available working days were 4000. Unauthorised absence for 2008 was recorded at 560 days = 14.0% Absenteeism = Days Absent (560) Total potential working days (4000) X 100
  • 25. Measuring Workforce Effectiveness