• Labour productivity
  • Output per employee
  • Staff Turnover

Employee retention

  • All businesses loose staff
    • Natural causes (illness, death)
  • Changes in strategy
    • Closing a branch
  • Bad management or conditions
    • If people are unhappy with the conditions of the job they are more likely to leave


An employee’s intentional or habitual absence from work.

  • A significant business cost
    • Sickness costs around £600 for each worker per year


Number of staff absent during period / Number employed during period

x 100

Alternative Formula

Number days taken off for unauthorised absence(during period) / Total days worked by workforce over the period

x 100

Worked example

Working days : 4000 Unauthorised Absence: 560

560/4000 x 100 = 14% ∴ Absenteeism = 14%

Practice Exercise 1

  1. Rate of inflation
  2. 190 workers, 178 employed by EOY and 24 workers left. 24/190 * 100 = 12.6%
  3. 6300 workers per year, 2700 for 1+ years. Retention. 42.8% retention.
  4. Labour productivity indicates how much output is produced for the size of the workforce. If a business has a very high labour productivity, then it means that each employee, on average, will produce a relatively high volume of goods over a specific time period. Labour cost per unit, on the other hand, indicates how much labour costs to produce a single unit. If labour productivity is high, then the labour cost per unit will decrease, as each person will be producing more over a time period.
  5. By providing workers with more benefits, they can ensure that motivation levels are increased, meaning that people will work harder, decreasing the labour cost per unit and thereby increasing labour productivity.