Business Studies- Employee Performance

Labour productivity- the output per worker in a given time period

• key test of employee performance

• output per worker ↑ overtime, labour productivity/efficiency is ↑

• give constant wage rates, labour cost per unit of output will be ↓

• influences the competitiveness of the business- opportunity to set lower prices

• productivity data- compared/ contrasted with results from businesses- same industry

• reasons why labour productivity might ↑

  • improved staff motivation + higher levels of effort

  • more efficient/ reliable capital equipment

  • better staff training

  • ↑ worker involvement- involvement in problem solving, speed up method of production (e.g: kaizen/ quality circle groups)

  • improved internal efficiency

Absenteeism-  measures the rate of workforce absence as a proportion of the employee as a total

• worked out for the whole year- knowing the total number of working days lost through absenteeism and expressing this as a % of the total no. of days that could have been worked

• absenteeism= disruptive to any business

  • especially for consumer service- cannot be held in ‘stock’

  • poor service- loss of customer loyalty, may not return

  • $ to employ extra staff or ask employees to work OT

• absenteeism- used to measure workforce motivation

  • well-focused/motivated workforce- avoid missing work

  • apart from Herzberg’s motivating factors- not being fully present at work, the ‘hygiene’ factors of the job might be making absenteeism worse

  • e.g: poor working conditions- lead to illness/ over-supervision lead to stress (days off work consequence of either problem)

Labour turnover- measures the rate at which employees are leaving an organisation

• labour turnover = high and ↑ OT, good indicator of staff discontent, low morale and possibly, recruitment policy leads to wrong people being employed

• high labour turnover more likely- in areas of low unemployment

  • better paid + more attractive jobs available in local area

• labour turnover rates can also depend on the industry

  • e.g: fast food restaurants- usually students/part-time/temporary employment vs. law practices and scientific research firms

• Cost of labour turnover:

• $ of recruiting, selecting and training new staff

• poor output levels + customer service due to staff vacancies

• difficult to establish loyalty + regular, familiar contact- establish good customer relationship

• difficult to establish team spirit

• Potential benefits of labour turnover:

• low skilled + less productive staff might be leaving- replaced with more carefully selected workers

• new ideas + practices- brought by new workers

• business plans to reduce staff anyway- rationalisation, high labour turnover will do this- leaving staff not replaced

Other measure of workforce performance- several other measures but not applicable to all types of business activity:

• wastage levels- the number of wasted or damaged products expressed as the proportion of total output

• reject rates as proportion of total consumers served

• consumer complaints as proportion of total consumers served

• days lost through strikes within a business

Employee performance-strategy to improve it

• no one solution to a problem of poor employee performance

• after calculating the measure- find out why

  • managers need to analyse productivity

• techniques frequently used:

  • regular appraisal of performance- against agreed preset targets, fail to reach, actions must be taken (disciplinary nature? further training?)

  • training to ↑ efficiency + offering opportunities for general educational qualifications (stretch + challenge)

  • quality circles- small groups of worker- encouraged to take responsibility (identifying + suggesting solutions)

  • cell production and autonomous work groups- team of workers given multi-skilling training + opportunity to take responsibility (making decisions?)

  • financial incentives