Role Of HR “ HR is a tool, not the objective”

UNDERSTANDING THE ROLE OF HR WITH THE “FIVE LEVELS OF HR CONTRIBUTION“MODEL

How to Measure Employee Productivity? HR must accept that it is their job to influence others within the organization to increase the productivity of our employees.

II. People Cost to Total Cost Ratio Another simple ratio to calculate is to identify what percentage of total variable costs are people costs. Effective management strategies reduce costs while simultaneously improving employee output. The very best firms keep the ratio of labor costs constant and they use technology and productivity tools to increase output.

III . People Cost To Output Value And Units The last simple ratio to calculate is to identify the ration between people costs and the dollar value of the firm’s output. A similar measure calculates the labor cost per unit of production. The ratio of people costs to the value of the firms output = Value of Firm Output / People Costs Labor costs per unit of production (Units) = Number of Units Produced / Labor Hours Used

3)People Profit The ultimate measure in productivity is called "people profit." It is a ratio between profit and total employee costs. Firms that generate more dollars of profit per dollar spent on employee costs are the most productive. People Profit = Operating Income (Gross Profit – SG&A Expense) / Total People Costs When calculating total people costs, include the cost of all wages, benefits, and HR administration .