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Posts Tagged ‘Employee Performance’

The Impact of the COVID-19 Pandemic on Employee Turnover Rate

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The COVID-19 pandemic led to business closures and financial losses. As a result, the number of people quitting their jobs or getting laid off has increased. According to the International Labor Organization’s ILO Monitor: COVID-19 and the world of work, “…there were unprecedented global employment losses in 2020 of 114 million jobs relative to 2019.” 

For organizations monitoring this labor issue, it would reflect the % Employee turnover rate, a key performance indicator (KPI) that refers to the rate at which employees leave an organization in a given period. Consequently, % Employee Turnover Rate increased due to the effects of the pandemic. The increase was sustained by Involuntary Employee Turnover, which occurs when employees are terminated from their positions.

The economy-wide closures further disrupted the employment structure for all but essential workers. This caused an increase in the disparities between industries and social classes, with the turnover being greater among women, youth, and minorities. Moreover, the impact of the pandemic on the work system has a significant variation between regions.

The most affected were the low-wage industries requiring high human interaction, such as transportation, hospitality, food service, construction, retail, and creative industries. The State of Working America report revealed that between February 2020 and February 2021, the U.S. hospitality industry registered the highest employment loss in the nation. It is the hardest-hit sector due to a large period of restricted international mobility, losing nearly 3.5 million jobs or 20.4% by the beginning of 2021.

Changing jobs or moving to another employer seemed difficult during the pandemic. However, even if movement restrictions are subsiding and life seems to get back to normal, the employee turnover remains on an ascending trend. 

Nonetheless, the job market is confronted with another challenge, and this time, it is generated by the Voluntary Employee Turnover. This type of turnover happens when an employee leaves a job mainly because they found a new job. However, the turnover can also result from promotion within the company or retirement. 

Employee Turnover in the Hospitality Industry

In the hospitality industry, a bounce-back was expected as restrictions began to be lifted, but a shortage of employees countered the previsions. According to the U.S. Department of Labor, the number of employees from the sector who quit their jobs is on an ascending trend. In March 2020, 534.000 employees quit their job in the hospitality industry. The number raised to 703.000 in March 2021, while the preliminary data for March 2022 show that 889.000 employees from the sector quit.

The situation does not seem to improve as the results of the University of Central Florida study on the state of industry employment reveal that former hospitality employees are reluctant to return to work due to the pandemic and are seeking professional opportunities in different industries.

Going through the experience of a global pandemic has shifted people’s perspective of what work should be like. Although the reasons for leaving a job are subjective to each person, the most common changes seem to be oriented towards flexibility and well-being. 

Even if employee turnover is seen as a result of poor business performance in an economy affected by restrictions or a change in priorities among employees, the effect of the pandemic is beyond doubt. It would continue to change the global work system and employee turnover. The change is characterized by the implementation of permanent remote or hybrid work policies, making job opportunities from around the world available, changing the jobs of essential workers, and even the phasing out of certain jobs due to automation.

Therefore, now organizations have to focus on employee retention. Together with employees, companies have to find ways to adapt to the new normal, reach a mutual understanding, and find a balance between employee expectations and business performance.

To overcome the impact of the pandemic on the % Employee Turnover Rate, organizations in the hospitality sector and even in other industries, especially in low-wage ones, could improve their compensation for employees. Meanwhile, employers could also go beyond the financial perspective and develop non-financial incentives by creating healthy and safe working environments, incorporating flexible working schedules and work-from-home options, and supporting employees as they pursue work-life balance. 

To ensure employee retention, organizations must improve their communication with employees to better understand their needs, keep them motivated and engaged, create the right growth opportunities, and offer them deserved recognition.

The KPI Institute’s Professional and Practitioner training courses in Employee Performance Management are designed to help professionals in designing, implementing, and monitoring performance systems that are matched with the company’s strategic goals.

Invite your colleagues and join the Certified Employee Performance Management Live Online course on 18-22 July, 2022 to strengthen knowledge and skills in managing individual and team performance. For more information, visit our website.

Work-Life Balance: Flexible Working Hours Lead to More Productivity

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Image Source: Jelena Danilovic | Canva

The topic of work-life balance is at the front of the minds of many companies and employees. In today’s fast-paced culture, human resource professionals are looking for ways to improve their firms’ bottom lines, boost employee morale, retain people with vital company expertise, and keep up with workplace changes.

Pandemics continue to wreak havoc on people’s lives and livelihoods across the world. While most talks center on the fear of contracting the disease, living in houses, overcrowded nursing homes, and business closures of all kinds, the crisis has also produced some positive outcomes. Reduced vehicle traffic and traffic accidents, decreased levels of air pollution, which must contribute to lower heart attack rates, and a renewing atmosphere could be considered the “silver lining” during these times.

The pandemic became a bridge for community action, family communication, behavior, sanitation, cleanliness, and online and distance education to happen. It is a blessing to be able to breathe clean air and drink pure water. It is now up to people to live a life considerate of all the gifts that nature has bestowed upon them. This kind and sensitive way of life will give you hope for a healthy and stress-free life.

Does work from home raise productivity?

“Working remotely has given me more space for long-term thinking and helped me spend more time with my family, which has made me happier and more productive at work,” Mark Zuckerberg, Facebook founder and CEO  wrote. He has also said that he expects about half of Facebook’s employees to be fully remote within the next decade.

According to a Stanford study of 16,000 workers done over nine months, working from home enhances productivity by 13%. Workers in the same research reported higher job satisfaction and a 50% reduction in attrition rates.

Whether they are a parent, carers, or pet owners, today’s remote employees must juggle a multitude of duties while working from home. Many employees have struggled to reconcile the obligations of their business with the needs of their families or households. This is why the concept of work-life balance is often tossed around. Employers, on the other hand, have acknowledged that each employee is unique. To ensure self-managed and independent personnel, several firms choose to offer personality-like assessments in the workplace.

Work-life balance is not a new notion in human resource research. It would continue to be studied in a variety of ways. This only makes sense because work-life balance has an 8.3 percent impact on job satisfaction and a 4.4 percent impact on employee retention.

Useful statistics for both employer and employee 
  • Commuting saves remote employees an average of 40 minutes every day.
  • Fewer real estate expenditures, lower absenteeism and turnover, and greater catastrophe readiness are the key savings for firms.
  • Since 2020, people have been meeting by video calls 50 percent more since COVID-19.
  • Nearly 70% of full-time workers are working from home during COVID-19. 
  • After COVID-19, 92 percent of those polled intend to work from home at least one day per week, and 80 percent expect to work from home at least three days per week.
  • 23 percent of those polled said they would take a 10% pay cut to work from home full-time.
  • Being at home during COVID-19 saves people on average close to $500 each month. As a result, you’ll save around $6000 every year.
  • Only 20-25 percent of businesses cover some or all of home office equipment and furniture costs.
  • After COVID-19, 81 percent of respondents expect their employer will continue to promote remote work.
  • Compared to those who did not, 59 percent of respondents indicated they would prefer to work for a company that offered remote work.

Source: Workplace Global Analytics

A brief primer on team performance measurement

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Working in a team can create synergy, since a good team will likely produce better results than individuals working separately. However, measuring team performance is even more challenging than measuring the performance of each employee separately, since you have to take into consideration each and every member’s performance, in relation to the others’, as well as the overall team’s.

In general, employees are members of departments. A department is a subdivision of an organization and an individual, generally, can only be part of one department. That being said, nowadays, teams are more flexible in how they are formed and how they operate: a team can be a temporary group formed to work on a specific task or project. Therefore, employees can be members of only one department, but several teams.

The first step is to link the team results to the organization’s goals, by cascading the objectives and KPIs from the organizational level to the team level. It is not very productive to have a well-performing team whose work does not help the organization reach higher performance goals.

Key aspects of team performance measurement

There are many indicators and measurements that can be useful when considering measuring your team’s results. In what follows, we’ve put together a list of the most widely employed benchmarks, so that you may get a general feel for what is considered useful to keep track of.

Employee attendance: Employee attendance is an important aspect of team performance since absenteeism incurs excess costs and will have an unwanted effect on team productivity & employee morale.

Moreover, late employees can be the source of annoyance or frustration, which will reduce team cohesion and further reduce a working unit’s effectiveness. Therefore, attendance related KPIs should be the first ones to track, when we talk about team performance:

  • % Absenteeism: Indicates the percentage of employees within the team who are repeatedly and/or unexpectedly absent, out of the total team members.
  • $ Lost time accounting: Measures the potential revenue lost because of idle workers or wasted hours within the team.
  • # Time lost by starting work late: Measures the volume of time lost due to employees starting their working hours late.

Client satisfaction: Every team has an internal/external customer, which is why satisfaction can be a good measurement unit. Improving customer satisfaction will eventually result in a more efficient production process, better service and ultimately, lead to more satisfied external customers. The most important KPI to measure in this regard is the following:

  • % Customer satisfaction: Measures the level of satisfaction exhibited by the team’s customers (current employees, distributors, vendors, departments, or external clients), towards the inter-functional services provided, be it communication, productivity and/or responsiveness.

Employee retention within the team: A low retention level or a high turnover level is usually connected with low levels of efficiency and productivity, which in the end can lead to a negative impact on an organization’s overall results.

This aspect can be influenced not just by the team performance, but also by the HR department’s performance, the working environment and work policies, the supervisor, as well as the promotion and professional development opportunities for the future. However, high level of employee turnover within a specific team could indicate team-related problems. The most important employee retention KPIs to measure are the following:

  • % Employee turnover: Measures the rate at which employees leave the team in a given time period (e.g., month, quarter, year).
  • % Employee retention rate: Measures the total number of employees retained at the end of the reporting period, expressed as a percentage from the total number of employees that were in the team at the start.

Employee satisfaction: Studies suggest a direct correlation between employee satisfaction, employee engagement and increased performance. Employee engagement can be increased through various company efforts, such as facilitating the development of skills for its employees, giving them a sense of trust and integrity, and clarifying their opportunities for future career development. The most important indicators to take into consideration, when looking to improve or maintain employee satisfaction, are the following:

  • % Employee satisfaction: Measures the employees’ satisfaction and motivation level, with aspects regarding their job and working environment: job responsibilities, team and management, workplace, and professional development.
  • # Employee Engagement Index: Measures the engagement level of employees in their work activities and responsibilities, in terms of enthusiasm, commitment and discretionary effort.

Productivity of individuals: Productivity of individuals is a key element of team performance. The following KPIs help measure a team’s contribution to the organizational goals, and the contribution of its members to the general team results:

  • $ Profit per employee: Measures the team’s contribution to the overall profit pool. It is a particularly important ratio in customer-focused businesses, such as those in the service sector.
  • $ Sales per employee: Measures a team member’s productivity and efficiency in generating sales.
  • % Human Capital Return on Investment (ROI): Measures the return on investing in a team’s human capital, after adjusting for the cost of financial capital.
  • $ Human capital value added: Measures the value added through productive activities, by a team’s members. Reflects the adjusted operating profitability figure, calculated by subtracting all expenses except for labor expenses, from revenue, and dividing the adjusted profit figure by the total headcount.

OKRs or KPIs?

In some specific cases, where the productivity of a team is not directly linked to the organizational revenue or profit (ex. support teams), it is more advisable to use OKRs (Objectives and Key Results), instead of KPIs (Key performance indicators), to measure productivity. OKRs contain a well-defined objective and one or more key results. OKRs help define how to achieve a goal through concrete, measurable actions. So, in case of the support teams, these results should be measured to track team performance, as they will be able to paint a more accurate picture of their efforts.

Conclusion

It is a complex process to measure team performance; therefore, it should be analyzed from numerous angles, according to each team’s specialization and workload. It should be noted that the aforementioned indicators are not the only ones which can portray a group’s results. However, if you are looking for a quick introduction into this topic, these KPIs will serve as a sustainable foundation on which you can build your employee management system.

Find out more about the team and employee performance measurement from our Certified Employee Performance Management course  or learn more about the OKRs from our Certified OKR Professional course.

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