Chapter 62- Human Recourses

Question 1

Labour productivity

Answer 1

Defined as output per worker

= Total output (per period of time) / Av no. of employees (per period of time)

Question 2

Importance of Labour Productivity

Answer 2

-Labour productivity is an important measure of the efficiency of a workforce. For example, if there are two teams of workers in a factory, each with identical equipment and the same number of workers, then the team with the highest productivity could be identified as the most effective team.

Increasing labour productivity is generally assumed to increase the competitiveness of a business. Higher labour productivity is generally assumed to increase competitiveness of a business.
Higher labour productivity should drive down costs, allowing business either to lower its prices and so gain higher sales, or to keep its prices the same but increase its profit margins.

However, businesses sometimes find that they become less competitive despite increasing their labour productivity.

This may occur for a number of reasons:

1. Rival businesses may increase their productivity at an even faster rate
2. New rival businesses may set up which pay considerably lower wages. Many UK manufacturing businesses have become less competitive over the past ten years due to the emergence of competition from low wage, low cost businesses .

Question 3

Limitations of LP

Answer 3

• Some business will have newer equipment and greater alteration compared to other businesses.
• Variations between businesses and industries = different productivity levels e.g. between manufacturing and the service sector.

Question 4

Benefits of increased LP:

Answer 4

• Greater efficiency, reduced costs = profit margins
increase
• Reduced wastage
• High sales/ increased sales and profit

Question 5

Labour Turnover

Answer 5

Is proportion of staff leaving a business over time.

= no. of staff leaving (over period of time) / Av no. of staff in post (during period) x 100

Question 6

High labour turnover caused by:

Answer 6

• low pay as people move onto higher paid jobs more quickly
• Few training and promotion opportunities= want to leave current job
• Poor working conditions, low job satisfaction, bullying and harassment= want to leave
• Recession= lower labour turnover as people want to have a job= less opportunities. Economic boom= more opportunities= high turnover.

Question 7

High labour turnover problems for business:

Answer 7

• Recruiting new staff costly
• Takes new staff time to become familiar with roles and way in which business works

•Larger companies put on induction programmes
which means high costs

•If post filled internally, may be training needs.

Benefits:

• New staff bring fresh ideas and experience from their work with other business
• Some workers may be ineffective and encouraged to leave= getting rid of workers= labour turnover
• Business shrinking in size, reducing size of workforce= labour turnover
• Where business pays low wages or working conditions, it may be more profitable to have a constant labour turnover than wages or improved working conditions.

Question 8

Labour Retention

Answer 8

Rate at which employees stay with the business.
Opposite of labour turnover

= No. of staff staying (over time period) / Av. No. of staff in post (in the time period) x 100

Benefits:
• Lower recruitment and selection costs
• More continuity
• Stable workforce

Question 9

Absenteeism

Answer 9

No. of staff who are absent as a % of the total workforce.

Absenteeism is a problem for all businesses for a number of reasons.

= No. of staff absent on a day / total no. of staff employed x 100

Question 10

Problems with Absenteeism

Answer 10

Problem because:
•Staff who are absent claim to be ill= business has to pay sick pay

• Cover staff have to be brought in + permanent staff paid for overtime work= increased costs
• Output may suffer if workers are not as productive as ones before
• Prolonged absences= disruptions if worker plays important role in project or area.
• Production delayed= problems with quality = customers can be lost.
• Can de-motivate staff left behind
• Can then be seen as acceptable for staff to be absent so more take it.

Question 11

Differences in rates of absenteeism occur because:

Answer 11

• Smaller businesses tend to have lower rates of absenteeism than larger businesses= because smaller business have much more commitment + feeling of teamwork. Larger businesses can be seen if they take a day off, no one will suffer so is acceptable.
• Health and safety, because with good health and safety procedures will tend to suffer less illness- poor procedures= higher absenteeism. Also some jobs naturally more dangerous= higher absenteeism.
• Nature of the tasks given to workers. If tasks fragmented and repetitive leads to low job satisfaction + de-motivated= sick. Worker in jobs which as interesting and rewarding tend to have lower absentee rates.
• Culture of workplace, workers that are overworked, bullied by superiors, needs ignored= stress= months off.

Question 12

Strategies to increase productivity and retention, and to reduce turnover and absenteeism:

Answer 12

•Financial Rewards – is financial rewards are increased, employees will work harder and produce more. Workers that are lazy or slow will not earn as much as those who are conscientious and productive. This system helps to motivate workers and businesses are likely to get more out of their employees.

• Employee Share Ownership
• Consultation Strategies
• Pseudo-consultation- where management makes a decision and informs employees of that decision through their representatives.
• Classical Consultation- way of involving employees through their representatives, in discussions on matters which affect them. Allows employees to have full influence of decisions.
• Integrative consultation- management and unions discuss matters of common concern.
• Empowerment strategies