calculating-and-interpreting-human-resource-data as

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Exam code:7131

Using data to make HR decisions

Businesses collect and analyse HR data to make informed decisions that help improve performance, reduce costs and plan for future workforce needs

Why HR data matters

Diagram showing the uses of HR data: identify problems, control costs, plan ahead, and improve performance around a central pink circle. — **Human resource data helps managers to be more effective**

Identify problems
- High labour turnover or rising costs may indicate poor working conditions, low morale or training gaps
Plan ahead
- Workforce data informs recruitment, training, succession planning and budgeting
Improve performance
- Tracking productivity or absenteeism helps managers take action to boost efficiency
Control costs
- Monitoring labour cost per unit and employee costs as a percentage of turnover helps businesses stay competitive

Strategic workforce planning

Data-driven planning helps ensure the business has the right number of people, with the right skills, in the right roles. For example:
- A retailer planning to open new stores can use HR data to forecast how many staff it will need and how much it will cost
- A manufacturer may use productivity data to decide whether it needs to recruit more staff or invest in automation
Good HR planning based on reliable data supports long-term business success and helps avoid costly mistakes such as overstaffing or skill shortages

Labour turnover

Labour turnover measures the proportion of employees leaving a business during a specific time period
It is expressed as a percentage and is calculated using the formula:

$Labour space turnover space equals space fraction numerator Number space of space staff space leaving space over denominator Average space number space of space staff end fraction space cross times space 100$

Internal and external factors that affect labour turnover

A rising rate of labour turnover can signal internal HR management problems such as
- Poor management leading to workers losing commitment
- A poor recruitment and selection approach leading to staff leaving soon after starting their job
- Low wage levels compared to those that could be earned elsewhere
External factors can also increase labour turnover in a business
- A buoyant local economy where workers are attracted to employment opportunities elsewhere
- Improved transport links that provide an opportunity for workers to seek work across a wider geographical area

The consequences of high labour turnover

Problems	Opportunities
Increased recruitment and selection costs Increased induction and training costs Lower productivity levels as workers settle into new roles	Workers with existing skills can be recruited to reduce the need for training New ideas and creativity can be introduced to the business New perspectives and approaches to problem-solving can improve business performance

Problems

Opportunities

Increased recruitment and selection costs

Increased induction and training costs

Lower productivity levels as workers settle into new roles

Workers with existing skills can be recruited to reduce the need for training

New ideas and creativity can be introduced to the business

New perspectives and approaches to problem-solving can improve business performance

Worked Example

In 2022, Domus Construction Ltd employed 7,200 workers, six per cent of whom worked at the head office.

During 2022, fifty-four head office employees left the business.

Calculate the labour turnover of Domus Construction’s head office in 2022.

[3]

Step 1 – Calculate the number of head office workers

$0.06 space space space cross times space space space 7 comma 200 space space space space space space equals space space space space space space 432 space workers$ (1)

Step 2 – Apply the labour turnover formula

<img alt=”Labour space Turnover space equals fraction numerator Number space of space Staff space Leaving over denominator Average space Number space of space Staff end fraction space space cross times space 100 Labour space Turnover space equals 54 over 432 space space equals space 0.125 space cross times space 100 space equals space 12.5 percent sign space” data-mathml=”<math style=”font-family:Arial” ><semantics><mstyle mathsize=”14px”><mi>Labour</mi><mo> </mo><mi>Turnover</mi><mo> </mo><mo>=</mo><mfrac><mrow><mi>Number</mi><mo> </mo><mi>of</mi><mo> </mo><mi>Staff</mi><mo> </mo><mi>Leaving</mi></mrow><mrow><mi>Average</mi><mo> </mo><mi>Number</mi><mo> </mo><mi>of</mi><mo> </mo><mi>Staff</mi></mrow></mfrac><mo> </mo><mo> </mo><mo>×</mo><mo> </mo><mn>100</mn><mspace linebreak=”newline”/><mspace linebreak=”newline”/><mi>Labour</mi><mo> </mo><mi>Turnover</mi><mo> </mo><mo>=</mo><mfrac><mn>54</mn><mn>432</mn></mfrac><mo> </mo><mo> </mo><mo>=</mo><mo> </mo><mn>0</mn><mo>.</mo><mn>125</mn><mo> </mo><mo>×</mo><mo> </mo><mn>100</mn><mo> </mo><mo>=</mo><mo> </mo><mn>12</mn><mo>.</mo><mn>5</mn><mo>%</mo><mo> </mo></mstyle><annotation encoding=”application/vnd.wiris.mtweb-params+json”>{“fontFamily”:”Times New Roman”,”fontSize”:”18″,”autoformat”:true,”toolbar”:”<to

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