Measuring the effectiveness of the workforce

Total output/total number of employees

• Shows how efficient staff are
• Helps managers to see whether training is needed or how the staff are paid e.g. piece rate. Needs to be changed to increase motivation
• Quick and easy to calculate

(No. staff leaving during the year/average no. staff) x 100

Why a high figure is a problem:

• Productivity will fall and actual costs will rise
• High recruitment costs
• Indicates low morale and motivation
• Can lead to poor customer service
• May damage the firms image, customer loyalty

(average no. of staff absent/total number of staff) x100

Why it is calculated:

• High or rising absenteeism leads to falls in productivity
• Affects quality of the product or service and customer service

• Allow firms to compare the effectiveness of staff with previous years and other firms in the industry to judge whether or not management policies and prodecures are working.
• Shows whether the firm needs to implement changes to increase motivation and productivity e.g. piece rate systems.