Labour Productivity
- Created by: Olivia Letts
- Created on: 30-10-18 15:45
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- Labour Productivity
- Why labour productivity matter?
- Labour costs are usually a significant part of total costs
- Business efficiency & profitability are closely linked to productive use of labour
- To remain competitive, business needs to keep unit costs down
- Formula
- Output per period (unit) / number of employees
- Factors influencing labour productivity
- Extent & quality of fixed assets e.g. equipment
- Skills, ability & motivation of workforce
- Methods of production
- Extent to which workforce is trained and supported
- External factors e.g. reliability of supplier
- Ways to improve labour productivity
- Measure performance & set targets
- Streamline production processes
- Invest in capital equipment (automation & computerisation) - expensive
- Invest in employee training - new set of skills
- Improve working conditions
- Wearables at work
- Potential problems in increasing labour productivity
- Potential trade off with quality - higher output must still be of right quality
- Potential employee resistance - depending on methods used (new technology)
- Employees may demand higher pay for improved productivity - labour costs per unit
- Why labour productivity matter?
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