Labour Turnover

Main reasons for staff wanting to leave a job:

Culture of the company

Better pay elsewhere

Lack of career progression

Poor management

Job insecurity

Poor benefits

A sustained high level of labour turnover has to potential to add significant business costs

  • Adds recruitment costs and training costs

  • Loss of experienced staff

  • Lost productivity

  • reduced morale

Ways of improving labour turnover

  • Soft HRM

  • Better benefits

  • Opportunities to progress within the company

  • Good company environment

  • Recognise and reward good performance

Explain the likely relationship between labour productivity and labour costs per unit

  • Labour productivity and labour costs per unit are going to have a negative correlation as the labour productivity increases which how many units each employee makes the labour costs per unit will decrease as the labour cost is spread across more units. Therefore the higher productivity improves efficiency and reduces unit costs.

Explain how a rise in the minimum wage may affect any one measure of workforce performance.

  • A rise in the minimum wage may increase employee motivation which is a key measure of workforce performance. This higher pay can make a worker feel more valued and satisfied and this would lead to increased efficiency and engagement. As a result this can lead to further productivity.

Functional Structure:

  • Organises employees by departments such as HR, finance or marketing

    Pros: Specialisation, clear hierarchy and efficient use of resources

    Cons: Slow decision making and poor inter departmental communication

Product based

  • Organised by product lines with each product having their own department

    Pros: Focus on individual performance, tailor strategies to different markets

    Cons: Can be costly, competition and duplication

Regional Structures

  • Organises operations based on geographic locations

    Pros: focus on regional customer needs, adapted to local laws, quicker decision making

    Cons: Duplication, possible disconnect from corporate strategies

Matrix Structure

  • Combines two or more structures

    Pros: flexible, combines expertise and encourages collaboration

    Cons: Complex, risk of power struggles and time consuming communication

Factors affecting span of control:

  • Skill and experience

  • Employees

  • Use of technology

  • Need for supervision and control

  • Physical location

Benefits of narrow span of control:

  • Close supervision

  • Greater control

  • better communication

  • support and development

  • Reduce overload

Benefits of wide span of control:

  • cost effective

  • faster decision making

  • Empowered employees

Centralised Structure

  • Decision making is kept at the top of the organisation

    Pros: Consistent decision making, strong leadership, quicker decision

    Cons: Slower response to customer needs, less employee empowerment, more pressure on senior managers

Decentralised Structure

  • Decision making is spread out to lower levels or regional teams.

    Pros: Faster decisions, better customer service and employees fell more valued

    Cons: Loss of control, risk of poor decisions and inconsistencies

Increasing the span of control means that the manager is in control of more employees at once. This has many benefits including an improvement in competitiveness this is because decision many is significantly faster as it has to travel through less levels within the hierarchy this means the business can be more competitive as it can react quicker to market conditions and be ahead of the curve compared to different competitors as their communication is more efficient which can boost productivity and motivation.