A-Level AQA Business Revision Unit 2(Part 3) : Measuring Workforce Effectiveness
Voluntary - When the employee leaves for their own reasons. This is usually unplanned as far as the organisation is concerned, and is most likely to happen in the first few months of employment
Involuntary - Refers to dismissal or redundancy
Labour Turnover Formula
Number of leavers per year x 100
Average # of employees per year
Current average Labour Turnover in the UK = 16-18%
Average cost of Labour Turnover per employee in the UK = £8,200
Problems of high staff turnover:
- Higher costs -> recruitment & training - Increased pressure on remaining staff
- Disruption to production - Harder to maintaain standards of quality
Problems of low staff turnover:
- Become complacent - More employees = high labour costs
- Lack of new skills and ideas - Harder to boost productivity
Ways to improve staff turnover:
- Effective recruitment and training - Provide competitive pay and other incentives
- Job enrichment - Reward staff loyalty
Labour productivity - The level of output by the workforce
Labour productivity can be measured by:
Ouput Per Employee Formula
Total output in a given period -------> Measures how much one employee produces on average
Total number of employees
Labour Cost Per Unit Formula
Total labour costs -------> High labour costs mean changes are needed
Total output in a certain period
