Analysing Human Resource Performance

What is labour turnover?

Percentage of staff that leaves the business per year.

How is labour turnover calculated?

(Total number of staff leaving ÷ Average number of total staff) × 100.

How do you calculate the average number of total staff?

(Number of staff at the beginning of the year + Number of staff at the end of the year) ÷ 2.

What does a high labour turnover percentage indicate?

Indicates a high number of staff leaving the business.

What are some reasons for high labour turnover?

Competitors offering higher wages and demotivated employees.

What are the advantages of low staff turnover?

Experienced employees remain, and training and recruitment costs are lower.

How is retention rate calculated?

Total number of staff who worked for the whole period ÷ Total number of staff at the beginning) × 100.

What factors contribute to high retention rates?

Higher salaries compared to competitors and motivated, valued employees.

What is labour productivity?

A measure of the units produced by an employee in a given period of time.

How is labour productivity calculated?

Total output ÷ Total number of employees.

How are employee costs as a percentage of turnover calculated?

(Total employee costs ÷ Total revenue) × 100.

What strategy might a Human Resources manager use if employee costs as a percentage of turnover are high?

They might decide to try and reduce total employee costs.

How is labour cost per unit calculated?

(Total labour costs ÷ Total units produced).

What actions can HR managers take if they are unhappy with their labour cost per unit?

Increase productivity or reduce employee costs.