Business Studies (Unit 2) Essays - Marketing, Economy, Business

Business Studies (Unit 2) Measuring Workforce Performance Businesses use three main performance indicators to measure the effectiveness of a workforce . These are: Labour Productivity Absenteeism and Labour Turnover Low productivity and high labour turnove r/absenteeism may imply that a business is under poor management. Businesses should compare these figures over time to look for trend s instead of just examining data from one year or one day. They should then compare the data with industry averages to see if they are having problems . Labour Productivity Productivity is the ou tput per worker over a certain period of time. Measuring productivity is relatively easy in the manufacturing industry because the number of products can be counted, but businesses that offer services struggle to calculate it (eg: hospitals). Labour Productivity does not always come down to who works the hardest . Modern equipment should speed up production and therefore increase productivity. Not all businesses can afford top machinery though, so b etter maintenance, extra shifts and small changes in Kaizen groups may help . A skilled and well-trained workforce may also increase Productivity by producing more at a faster rate, whilst making fewer mistakes. M otivated workers are also more likely to produce more than un-motivated ones. Labour Turnover Labour Turnover is the amount of staf f leaving a business . The formula for calculating Labour Turnover is : Staff leaving per year / average number of staff * 100 = % Turnover Rate If the Labour Turnover rate is increasing, it may be a sign of workforce dissatisfaction. If this is the case, the business should look at whether the causes or internal or external. There are some examples below Internal External Poor leadership More local vacancies Wages are too low Better wages Businesses should make sure they get the right balance of Labour Turnover so that they can enjoy the positive benefits of losing staff without suffering the negative consequences too. Positive Negative New workers bring in new ideas and enthusiasm Additional costs of recruitment and selection New workers are employed with needed skills Additional costs of training new staff There are new ways of solving problems A loss of productivity while new staff settle in Absenteeism As well as Labour Turnover, Workforce Absenteeism can be a good indicator of satisfaction. It can be calculated with the following formula Average numb er of staff absent per day / total number of staff * 100 = % Absenteeism Like with Labour Turnover, businesses should look for trends in Absenteeism instead of focusing on one day. Organisational Structures An organisational structure is the formal way that the manage ment of a business is organised . I t is often presented as a diagram and shows who is in charge of whom. In the early stage of a business, it is not usu ally necessary to have an organisational structure as most of the day-to-day decisions are carried out by the owners. However, as a business grows more people be come involved, so there is a need for a formal structure which shows the roles and responsibilities of each employee. The Level of Hierarchy shows the number of different levels between the top and bottom of the workforce. -26670047688500 The Span of Control refers to the number of people directly under the supervision of one manager . The blue employee on the second row of the Narrow Span of Control is accountable for at least 2 others, so for this business the Span of Control is at least 2. In the wider diagram the Span of Control is at least 5. Advantages (Narrow) D isadvantages (Narrow) Allows close control and managerial supervision Staff may feel over-supervised and untrusted Communication can be good between small teams It may drive away enterprising staff Those at the lower end of the hierarchy have good career prospects in terms of promotions Communication may be slow as there ar e more levels of hierarchy (delayed decisions ) Advantages (Wide) Disadvantages (Wide) Staff are able to make moderate decisions Lower hierarchy workers may become stressed Less management means less overhead costs Managers may feel a loss of power The Chain of Command is the reporting system from the top to