What is employee retention?
The ability of a business to persuade its staff to stay with them
What is labour turnover and how do you calculate it?
The % of the workforce that leaves a business in a given period.
Why is high staff turnover a problem?
- Higher training and recruitment costs
- Increases pressure on remaining staff
- Disruption to production and productivity
- Hard to maintain quality of customer service and product quality
How can you improve staff turnover?
- Effective recruitment and training
- Competitive pay and benefits
- Job enrichment
- Reward staff loyalty
What is labour productivity and how do you calculate it?
Measures how much one worker can produce in a given time
Why does labour productivity matter?
- Labour costs are normally a very high % of total costs
- Business efficiency and profitability is closley lonked to productive use of labour
- Competitvness depends on keeping unit costs down
How can you improve productivity?
- Measure performance and set targets
- Streamline production processes
- Invest in better capital equipment
- Invest in employee training
- Improve the layout or organisation of the workplace
What is labour absenteeism and how do you calculate it?
Measures how often staff are absent
What is a core competence?
Something unique that a business has, or can do, strategically well.
Enables a business to compete effectivley by focusing on their strengths
What are the 4 ways that a business can develop core competencies?
- Can arise from the collective learning or expertise of a business
- Can arise from the business's ability to bring together skills and technologies
- Can arise from the businesses ability to add value to their products meaning they're more superior than competitors
- Can arise from the business being different to competitors
What are the 3 criteria that has to be met for a business to have a core competence?
- Must provide consumer benefits
- Needs to be hard for competitors to imitate
- It can be used across many different products and markets
What is Kaplan and Norton's Balanced Scorecard?
Strategy performance management tool to keep track of the way that staff, within their control, are carrying out their activities and to monitor the concequences arising from those actions.
What are the 4 different perspectives that Kaplan and Nortans Balance Score card suggest that a business should use to identify KPI's?
- Financial perspective
- Customer perspective
- Learning and growth perspective
- Internal processes
What are the advantages of Kaplan and Norton's Balance Scorecard?
- It takes a broader view of business performance
- It links performance to long term aims and visions
- It involves everyone in the business
- Its flexible - each business can decide their own KPIs
What are the disadvanatges of Kaplan and Norton's balanced score card?
- Danger of too many KPIs which may lead to confusion and lack of clarity
- Difficult to find balance between all 4 perspectives
- Too often senior management will prioritise the financial perspective to achieve short term gains
- Information and KPIs need to be up to date
What is Elkington's Triple Bottom Line?
Highlights that the business has many different objectives - not just profit
What is corporate social responsibility?
A form of self-regulation by which companies exceed legal minimum requirements in an attempt to be good citizens
What 3 areas does the Triple Bottom Line highlight as important?
Why is the Triple Bottom Line needed?
- Businesses are usually assumed to be profit maximisers
- Profit is the traditional measure of business success
- Profit is closely linked with business value
- Profit is often the basis for financial incentives
What are the advantages of the triple bottom line?
- Encourages businesses to think beyond narrow measure of performance
- Encourages CSR reporting
- Supports measurement of environmental impact and extent of sustainability
What are the disadvanatges of the triple bottom line?
- Not a very useful measure of overall business performance
- Hard to reliably and consistently measure people and planet
- No legal requirement
What is shortism?
Concentration on short term projects or objectives for immediate profit at the expense of long term security
What is long termism?
The practice of making decisions with a view to long term objectives or concequences