Labour ratios

In this lesson

1. 0:00 Labour ratios for workforce monitoring
2. 0:26 Productivity versus production explained
3. 1:38 Three key labour ratios overview
4. 2:46 Efficiency ratio calculation and interpretation
5. 3:23 Capacity ratio calculation and interpretation
6. 4:07 Production volume ratio and formula linkage
7. 5:20 Worked example: Katko labour ratios
8. 7:01 Standard hours calculation walkthrough
9. 9:02 Interpreting efficiency and capacity results
10. 10:18 Labour turnover ratio fundamentals
11. 11:17 Labour turnover calculation and formula
12. 12:44 RCD Co labour turnover worked example
13. 14:32 Analysing labour turnover implications

About this lesson

You'll discover why efficiency (speed of output) matters more than raw production volume, how these ratios link together mathematically, and how to apply them to real business scenarios. You'll also explore labour turnover ratio, a critical indicator for monitoring staff retention and understanding the hidden costs of losing skilled workers. Labour efficiency measures how quickly your workforce produces relative to expectations. If your efficiency ratio is below 100%, workers are slower than standard; above 100% means they're faster. Capacity ratio shows whether you extracted more or fewer hours from your workforce than budgeted. Production volume ratio combines both to reveal your actual output against plan. The three ratios are mathematically linked: efficiency multiplied by capacity equals production volume. Understanding this relationship helps you diagnose whether increased production comes from genuine productivity gains or simply from having more hours available. Labour turnover ratio tracks the percentage of staff replaced during a period, calculated as employees replaced divided by average number of employees, multiplied by 100. This matters especially in skilled industries where losing experienced staff damages client relationships and business continuity. High turnover isn't always bad—fast food chains expect it—but in professional services like accountancy practices, it signals serious problems. Once you've calculated the ratio, you need context: compare it to industry benchmarks and investigate root causes like pay, working conditions, management, or relocation. High turnover creates recruitment costs, training burdens, and operational disruption that impact your bottom line.

Duration: 17m