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AQA AS BUSS2 2a Staff Productivity & Turnover

It is one thing to have the right structures in place and for communication to flow well, but we still need to know how productive people are in their work, and to make sure that they are leaving for healthy, constructive reasons. #BUSS2

Graham Wilson

on 9 December 2013

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Transcript of AQA AS BUSS2 2a Staff Productivity & Turnover

Labour productivity
A measure of the output per worker in a given time.

= output / number of employees
in the same period

labour productivity per month and
labour cost per unit per month

Where output in a given month is 20,000 units and 40 people are employed at a cost of £1,000 per worker.
Labour turnover
The proportion of employees leaving a business over a period of time — usually a year.

Labour turnover for a given period =

number leaving a business × 100
average number employed
How to increase labour productivity
Labour productivity may be increased by:

recruiting suitably skilled and trained employees
providing training to enhance skills and attitudes of existing employees
providing pay and
non-financial benefits
that improve
improving working practices, technology and capital equipment

What is likely to be the effect of an increase in labour productivity on unit labour costs?
Measuring the effectiveness of the workforce
Pt 1 - Labour productivity & turnover
You are expected to be able to:

Identify the key measures of personnel effectiveness
Analyse causes of high labour turnover
Evaluate ways to improve personnel effectiveness

Improving staff retention
Some industry sectors struggle to retain staff. Call centres are notorious for "dysfunctional staff turnover".

Watch this video and draw up a list of the ways in which PayPal are tackling this...
Dr Graham Wilson
Suppose improved machinery is introduced in our previous example, the number of employees remains the same and output increases to 30,000.

What is labour productivity and labour cost per unit now?
Calculate the rate of labour turnover where the average number of staff employed in a firm last year was 250 and the number of employees who left the firm that year was 10.
The costs of high 'dysfunctional' labour turnover
High recruitment and selection costs
High induction and training costs
A need to redesign jobs
Reduced productivity
Low morale among remaining workers
Generic ways of improving (ie reducing) labour turnover
Monitor your own and benchmark others
Exit interviews
Recruitment and selection
Induction and training
Build up business-specific human capital (and plan to retain it!)
Full transcript