Labour productivity.
Labour turnover and retention.
Absenteeism.
Labour productivity formula:
Total output (per period of time)
Average no. of employees (per period of time)
Labour productivity is an important measure of the efficiency of a workforce.
Methods of improving labour productivity:
Financial / non financial ways to improve motivation:
Training to improve skills levels.
Kaizen.
Automation / AI (artificial intelligence).
Sometimes a business will increase their productivity but still remain non competitive. Why?
Rival businesses may increase their productivity at a faster rate.
Low wage / low cost competitors in the Far East and eastern Europe.
Click on the picture.
Labour turnover formula:
No. of staff leaving per time period x 100
Average no. of staff per time period
What factors may cause high labour turnover?
Problems with high labour turnover:
Recruiting new staff can be costly.
New staff take time to become productive.
Induction and other training is an expense.
Cost of recruitment in the UK. Details here.
Can you think of any benefits of labour turnover to a business?
Labour retention formula:
No. of staff staying (per period of time) x 100
Average no. of staff (per period of time)
Absenteeism formula: (Rate of absenteeism)
No. of staff absent on a day x 100
Total no. of staff employed
Costs of absenteeism:
The need to pay sick pay.
Lost production.
The cost of temporary staff.
Lower levels of customer service.
The risk of developing a culture where 'throwing a sickie' becomes acceptable.
Strategies to increase retention and to reduce labour turnover and absenteeism:
F.W. Taylor and his theory of 'Scientific Management'.
This involves paying 'piece rate pay'.
Other financial incentives could include:
Performance related pay.
Bonus systems.
Profit related pay.
Commission payments.
Employee share ownership schemes - senior managers may be given shares as a bonus if performance targets are met.
An example here.
More junior staff may join a share saving scheme.
Staff save a monthly amount and after a number of years they can buy shares at a discounted rate.
It is thought that owning shares in the company is a strong motivator.
Why do you think this is?
Consultation strategies:
Employees are likely to be more motivated and productive if they are involved in decision making.
Three models:
1. Pseudo-consultation:
Management makes decisions and tells employees through their representatives.
2. Classical consultation:
This involves employees, through their representatives, attempting to influence decision making.
3. Integrative consultation:
Management and employee representatives discuss and explore matters of common concern such as increasing productivity.
A more democratic approach.
This could build on the success of 'quality circles'.
Empowerment:
Authority or power given to someone to do something.
An employee has been given authority to organise or control a range of activities.
More meaningful work is said to be more motivating.
Staff must receive meaningful training and resources to make this happen.
Empowerment and customer service at Pizza Express. Details here.
When empowerment goes wrong: Click on the picture.
Video here (from 5.50).
