Unit 4: Decision Making to Improve HRM Performance

Flashcards covering key metrics for improving HRM performance, including employee costs as a percentage of turnover and absenteeism, along with their definitions, formulas, and implications.

How is 'employee costs as a percentage of turnover' defined?

It relates to the percentage of sales turnover needed to cover employees or labour costs.

What is the formula for calculating employee costs as a percentage of turnover?

Employee costs as a % of turnover = (employee costs / turnover) * 100

Why does the significance of employee costs as a percentage of turnover vary between businesses?

It depends on the type of business; labour-intensive businesses (e.g., retail, fast food) have a much greater percentage of costs in labour than highly automated businesses.

What might a high employee costs as a percentage of turnover indicate?

Low profit margins, prices that are too high for products, low labour productivity, too many staff recruited, or employees paid well above the industry average.

What actions might a business take to reduce a high employee costs as a percentage of turnover figure?

Make some staff redundant or redesign jobs to improve the efficiency and productivity of workers.

What is the definition of absenteeism in HRM?

Absenteeism is the proportion of employees not at work on a given day.

What is the formula for calculating absenteeism?

Absenteeism = (number of days absent in the period / total number of working days in a period) * 100