Evaluating work and family strategies in your workplace
Have you put in place work and family strategies in your organisation?
Yes
This guide will help you to measure how well your strategies are working. It will also help you to improve your existing workplace practices and consider new strategies to meet your business goals.
No
Well-developed strategies have an in-built evaluation process. If you are just starting out, and looking to put together a work and family strategy, this guide will help to consider ways in which you can target your strategy to achieve solid outcomes. It will also help you measure the success of your strategy.
There are many ways to conduct an evaluation. The larger your organisation, the more likely you are to have readily accessible data and information. Some organisations have dedicated human resource officers who are responsible for evaluating human resource strategies. Many smaller organisations do not.
The important thing to remember is that evaluations do not have to be extensive and they do not have to consider every issue, every time. Once one evaluation has been carried out it makes it much simpler each year to build on the achievements of the previous evaluation. New considerations, new data, and new ways of collecting data can be introduced over time.
To help you start, or fine tune, this critical process, this guide has been broken up into the seven considerations important to a good evaluation process.
1. Why am I evaluating?
2. What do I want to measure?
3. How do I collect data/information?
4. How do I identify the key issues?
5. How do I cost these issues?
6. How do I realise our goals?
7. How do I measure our achievements?
This guide is based on the work of Dr Graeme Russell, Macquarie University undertaken for the Department of Education, Employment and Workplace Relations.
1. Why am I evaluating?
“Improved measurement of human resources will lead to more rational and productive choices about managing staff, and allocating them to improve overall business performance”
(Workforce Economics,1997)
People management indicators are an essential tool for organisations looking to improve their performance and capitalise on their investment in people.
A good system of measurement and evaluation will help you to:
-
determine which initiatives are contributing to your organisation’s business objectives;
-
identify the strengths and weaknesses in your current work and family strategy, or in your people management strategies more generally;
-
calculate the return on investment in initiatives; and
-
gather information to inform future strategies or initiatives, or to make your current strategy even more family-friendly.
If you are a human resource officer or manager, you may have experienced difficulty in convincing your senior management or proprietors of the benefits of a work and family strategy. Implementing work and family measures may be considered too costly or too resource intensive. There are two key ways to clearly demonstrate the value of family-friendly practices:
1.Provide costings and show savings, and benefits for the organisation;
2.Provide costings and show cost-neutrality, and benefits for the organisation.
The best, if not the only, way to provide this information is by measuring and evaluating your workplace and workplace practices.
Back to top
2. What do I want to measure?
In a nutshell, what you will be looking to measure is the way work and family strategies can, or have already, positively impacted on your organisation.
To do this you will need to gather some baseline information or data about your workforce, preferably before the strategies were put in place.
Your key indicators will relate to all, or some, of the following:
-
The demographic make-up of your organisation: the age, gender, family responsibilities, and position within the organisation of your staff;
-
The turnover of staff by age, gender, family responsibilities and position in the organisation;
-
Reasons for turnover – for example, inflexibility of hours, pay levels, or staff seeking career opportunities elsewhere;
-
Return rates from parental leave, and duration of service after return from parental leave;
-
Absenteeism rates by age, gender, family responsibilities and position in the organisation;
-
Staff morale and satisfaction; and
-
Length of service of staff by age, gender, family responsibilities and position in the organisation.
Indicators need not be overly complex, and can be improved over time. It is also important to tailor indicators to particular business objectives. A key problem for the organisation may, for example, be staff turnover and absenteeism. You may wish to initially concentrate on these two indicators.
However you may not know what the primary issues are for your organisation until you have collected and analysed data. For these reasons, it is often best to set a wide net and capture as much information as you can. It can also be more economical to seek data and information against a wide range of indicators at one time, rather than completing a number of smaller data collection exercises. Of course, different ways of collecting data will deliver different types of data. These issues will be considered next.
Back to top
3. How do I collect data and information?
Depending upon the sophistication of your human resource systems already in place, the difficulty of this task will vary. Many organisations find that undertaking an evaluation leads to some changes to enable future evaluations to be carried out more easily. The more commonly used data collection mechanisms are outlined below.
Personnel records and reports
These records will give the basis for your evaluation. From this data you should be able to extract:
-
-
An analysis of leave records: the type and length of leave used, and by whom. This analysis should include absenteeism rates, and rates of return from parental leave;
-
An analysis of terminations of employment: number of resignations and dismissals, and where and amongst whom these are occurring. This analysis should include turnover figures; and
-
An assessment of the length of service of different types of employees.
Exit interviews
You should make sure that exit interviews obtain the specific details, particularly with respect to family issues, these should be well targeted. If you don’t have an exit interview process in place, you could conduct telephone interviews with a random sample of people who have resigned recently to determine the extent to which family matters have had an impact on turnover (for both women and men).
Surveys
Staff surveys enable you to:
-
Find out the family responsibilities of staff members, to see if these are related to turnover rates and leave usage;
-
Find out invaluable information relating to staff morale and satisfaction; reasons for taking leave; and any particular problems staff may experience in combining their work and family lives.
Surveys determine the needs of employees, but they should also be used to (i) help identify business problems relating to work and family issues; and (ii) establishing base line measures to be used in an evaluation of the impact of the work and family program. For these reasons consideration could be given to not only collecting information from employees, but also from their partners, family and the broader community. Alcoa is an example of a large organisation that has done this and found it useful.
Focus groups
Focus groups enable you to gather even more detailed information on:
-
Staff morale and satisfaction;
-
Reasons for leave usage;
-
Potential reasons for turnover; and
-
Staff ideas on the best ways to help them balance their work and family lives.
Other information that should be gathered from employees
Using your choice of data collection mechanism, the following factors, above and beyond information supplied by personnel records, should be considered:
-
The impact of the demands of family life on work performance (for example, poor productivity, absenteeism) and on career development;
-
The impact of demands of work on family life (including measures of family life satisfaction and individual well-being);
-
Views about how the organisation currently deals with work and family issues including an assessment of supervisor/manager support for work and family issues, and about how it should deal with them;
-
Views about which policies and practices would help people balance work and family and achieve the business objectives of the organisation;
-
Ratings of importance and satisfaction with current employee benefits;
-
Current patterns of dependent care and likely future demands.
Job satisfaction, opinions about organisational culture and organisational commitment;
-
Views about equal employment opportunity;
-
Background and family characteristics of employees.
Back to top
4. How do I identify the key issues?
The more thorough your data the more easily you will be able to identify the key issues.
Some of the key questions you will need to ask are:
-
Where, or for whom, in the organisation can turnover rates be improved?
-
Where, or for whom, in the organisation can absenteeism rates be improved?
-
Where, or for whom, in the organisation can return from parental leave rates be improved?
-
Where, or for whom, in the organisation can employment opportunities be improved?
-
Where, or for whom, can staff morale and job satisfaction be improved?
-
Where, or for whom, can length of service be improved?
A methodical approach, using your key indicators, will provide a detailed picture of your organisation, and where opportunities exist in your organisation to improve people management practices.
This type of analysis is often called an “opportunity analysis”. A sample of an opportunity analysis is provided at this link.
Once you have undertaken an opportunity analysis and identified your organisation’s key issues, there is value in costing your potential improvements. This will give you valuable leverage with your senior management. It will also provide you with the parameters within which you can introduce new work and family initiatives. This means if, using rigorous costings, you can demonstrate that the likely cost of implementing a family-friendly practice does not exceed the dollar value of the expected savings of the measure, you can demonstrate a benefit to the organisation.
For example, improving the return from parental leave rate by 20 per cent might save the organisation $300 000 per annum. You may be able to demonstrate that implementing part-time work on return from parental leave would cost $150 000. Therefore, a benefit to the organisation is likely to be realised. Many family friendly initiatives are low cost – for example, providing a phone for emergency family calls, providing more flexible start and finish times, and so forth.
Sample “opportunity analysis”
By examining the organisation’s data and asking questions such as those outlined in the previous section, company A discovered the following:
1. Staff turnover in their retail arm was 15 per cent for men, and 23 per cent for women. Family reasons accounted for 35 per cent of the male turnover, and 59 per cent of the female turnover.
Opportunity: To reduce turnover among female retail staff to a rate comparable with male retail staff.
2. The absenteeism rate was highest among junior male staff (5.35 per cent) and middle-management female staff (4.8 per cent). The average for all staff was 3.5 per cent.
Opportunity: To reduce absenteeism across the organisation to an absenteeism rate of 3 per cent.
3. Staff morale and job satisfaction was significantly lower for female managers than for male managers.
Opportunity: To increase job satisfaction for female managers to a rate comparable with male managers.
4. Men significantly outnumbered women in the middle to senior management ranks, particularly in the sales positions.
Opportunity: To promote career opportunities for female sales staff (also with a view to decreasing turnover).
Back to top
5. How do I cost these issues?
There are a number of ways to calculate costs and estimates can vary widely. It is important to try to estimate costs where you can, because this will enable you to clearly demonstrate cost savings or cost neutrality.
In the case of costing turnover, some methods relate strictly to direct costs such as advertising and recruitment. Others take a broader approach and incorporate ‘opportunity costs’ such as loss of productivity, giving wrong change to customers and improper use of equipment due to inexperience of new staff.
Some broad estimates are outlined below, with links to more comprehensive costing models. Turnover and absenteeism are the most commonly quantified staff costs, and so this is where examples have been provided.
Turnover
As a general rule, turnover is estimated to be between .75 and 1.5 of a person’s annual salary. This figure can vary significantly however, with some estimating that losing a senior manager or highly skilled employee can cost up to 2.5 times that person’s annual salary. On the other hand, the loss of a less skilled, more junior employee can cost considerably less.
Details of costing formulae for turnover, and examples, are provided at this link.
Absenteeism
Studies have suggested that absenteeism represents a major cost for Australian businesses. One such study, conducted by the recruitment company Morgan and Banks found that sick leave was costing Australian businesses $2.56 billion a year.
Again, there are a variety of ways to calculate the cost of absenteeism. Some examples of costing formulae for absenteeism, and examples are provided at this link.
Other indicators
Organisational improvements are not always strictly measurable on a dollar basis. A thorough evaluation will also attempt to measure the impact of strategies on organisational culture and staff morale. Putting a monetary figure on staff morale is difficult – but the impact can be very tangible in terms of decreased turnover and absenteeism, and increased productivity.
Costing formulae for turnover
Two elements exist in calculating turnover costs - direct costs and indirect costs. Direct costs are relatively easy to calculate, and a formula is outlined below. The US Department of Labour uses a conservative .33 per cent but most organisations, as outlined earlier, use between .75 and 1.5. You may wish to pick a starting point at a lower point on the scale if your employees are at a lower skill level and are easier to replace and, conversely, a higher level in the scale if they are more highly skilled and more difficult to replace or costly to train.
1. Estimate the number of employees that left your company during the past 12 months. _______
2. The average cost of turnover is _____% of their yearly base salary, bonuses, and commissions. Be sure to include the cost of employee benefits.
3. Annual wages $__________ X % of annual wages__________ = $__________ lost per employee.
4. Total cost of turnover: Annual wages percentage (%) X number of employees replaced = $__________
Using this formula will provide you with a solid starting point. A more thorough evaluation will, however, seek to capture more complex information relating to indirect costs.
More sophisticated evaluation methodology identifies five levels of costs (Cascio, 1991):
-
Outlay costs – for example, materials used in training, costs for advertising;
-
Time costs – for example, time involved in recruitment, selection and training;
-
Fixed costs – for example, salary of replacements for absentees
Variable costs – for example, overtime payments because of absenteeism; and
-
Opportunity costs – for example, what the organisation might have earned had it put the resources in question to another use.
The Equal Opportunity for Women in the Workplace Agency (EOWA) site has a calculator tool to assist you in working out your turnover costs.
A template to assist you in calculating the indirect costs of turnover can be found at
Delivering Solutions.
Examples of company costings of turnover
For Balancing the Till (2001) a leading Australian retailer said they had estimated costs per lost staff member at:
-
$3800 per full-time staff member;
-
$2000 per regular part-timer; and
-
$1200 each for casual staff.
The NRMA has undertaken a comprehensive analysis of their costs associated with turnover. Using a model taking account of many of issues listed as ‘indirect’ costs, their calculations (1995) are:
For the management positions, NRMA broke the costs down in the following way:
-
Recruiting costs: $ 3 056.35
-
Separation costs: $ 230.30
-
Training costs: $25 606.15
-
Downtime (till position is filled): $24 750.00
Another Australian organisation has also developed a model for costing labour turnover. They recognise three components:
-
Separation costs;
-
Acquisition costs; and
-
Learning costs.
They estimated costs for three types of employees (1994):
-
Mechanical engineer $56 875
-
Administrative assistant $15 010
-
Production operator $21 895
Another formula estimates a cost of $12 719 for replacing an employee with an annual salary of $28,000 (Corporate Culture and Caring, The Business Case for Family Friendly Provision, Institute of Personnel Management, 1993). This calculation includes recruitment costs, temporary cover, training costs and the cost of the limited functioning of a new recruit.
Costing formulae for absenteeism
The costs of absenteeism include:
-
The cost of paying the employee both wage/salary and/or benefits while not producing.
-
The costs of juggling other employees to cover the absent employee.
-
Costs associated with overtime, production losses, and inefficient material usage.
One well-used and simple formula for calculating absenteeism is based on adding 30 per cent of employer costs to simple salary costs.
For example, the simple salary costs for an employee on $32 000 per annum, per day, would be $133 a day ($32 000 divided by 240 days – the number of working days in a year). The cost of absenteeism for the employee would be $173 per day ($133 plus 30 per cent). If that employee were to take 10 sick days that year, the total absenteeism cost for that employee is $1730.
Calculating the rate of absenteeism is also very useful in terms of the development of indicators. Normally, the rate of absenteeism is calculated by dividing the number of working days lost through absence in any given period by the total number of available working days in that same period.
Absenteeism Rate = Number of lost working days due to absence
(Number of team members) x (Number of Workdays) x 100.
For Example:
a. Average number of employees in work force = 100
b. Number of available workdays during period = 20
c. Total number of available workdays (a x b) = 2,000
d. Total number lost days due to absences in the period= 93
e. Absenteeism percent: (d [divided by] c) x 100 = 4.65 percent
An absenteeism rate of above 5 percent is generally considered to be a serious indicator that a company’s human resource management practices are not working. Across most industries about 3 percent is the norm.
The 1995 Australian Workplace Industrial Relations Survey found that the average rate of absenteeism on an average day was 2.7 per cent. Those industries with the highest levels of absenteeism were electricity, gas and water supply (4.3), transport and storage (3.7) and communication services (3.7).
Examples of absenteeism costings
In 2000, Dr Rodski and the then MTIA concluded an extensive 4 year study into absenteeism. The focus of this study was on the management practices of these organisations and the resultant absenteeism rates. This study found that:
-
World wide actuarial studies of absenteeism costs conservatively estimate that every 1% reduction in absenteeism for 500 employees represents a $500,000 saving to a business annually; and
-
A division or company with 3000 employees and a 10% absenteeism rate which reduces this rate to 5% can expect annual savings of $15 million.
According to Professor Stephen Deery, Head of the University of Melbourne Department of Management and Industrial Relations, the average level of absenteeism was around 15 days a year (6-7 per cent per annum) in the banking industry. (The Melbourne Business Review, November 1997).
Corporate Culture and Caring, The Business Case for Family Friendly Provision provides a model for making absenteeism calculations. For an employee on $25 000 per annum who takes 11 days sick leave out of 260 days, the cost estimate $1057, or 4.2 per cent of salary costs. For a person on $35 000, the cost estimate is approximately $150 a day.
Back to top
6. How do I realise our goals?
Your opportunity analysis will have revealed to you the opportunities within your organisation that will enable you to make improvements and savings for the organisation.
Your challenge now is to make these savings a reality, and these details will form the basis of the business case for your work and family strategy. By looking at your data and the information you have received from the your staff, you will determine the actions the organisation needs to take. This requires a more detailed analysis of your data.
An example
You know from your opportunity analysis that absenteeism among your female middle management is too high at 4.8 per cent. You wish to reduce this to 3 per cent.
By examining personnel records and staff survey results you find that the rate is higher among women with family responsibilities, and that almost half the absences were for family-related reasons. A significant proportion of these absences were for child-care reasons or to attend professional appointments for the family.
By using a number of available resources, you will consider ways that will assist your staff to meet these commitments, and that will lessen the financial impact on your company. “Time-banking”, flexible working hours, providing assistance with child-care, or working from home may address some of these needs.
You will need to estimate the costs of these policies and the extent of their possible benefit to determine which, if any, you wish to introduce as part of your overall work and family strategy. Other key implementation processes will also need to be considered.
When deciding on specific work and family initiatives, your decisions should be based on:
-
Projected cost/benefit analyses of specific strategies (for example, flexible working hours, part-time work);
-
Analyses of the possible impact on employee commitment, quality of work and customer service (for example, implementing flexible working arrangements might provide more opportunities to extend hours for customer service, or for implementing other human resource initiatives such as team work; and
-
The level of trust in your organisation (for example, implementing flexible leave or working hours in an organisation with low levels of trust might not result in expected benefits of reduced absenteeism).
Some examples of cost/benefit analyses are provided at this link.
Estimating costs of policies
When doing a cost/benefit analysis you will need to consider the range of costs associated with the development and implementation of any new policy (or adjustment of any existing policy). A number of considerations are outlined below. Clearly not all will apply for each new policy. For example, advertising and recruitment costs might be applicable for the creation of new part-time positions, but would not be applicable to the implementation of flexible working hours:
-
Policy development (involving both human resource officers and managers);
-
Advertising and recruitment;
-
Administration (for example, salaries, cost of new forms, leave);
-
Training for managers and supervisors in managing new arrangements;
-
Costs for additional equipment;
-
Workers compensation;
-
Reduced productivity while new arrangements are being implemented;
-
Back-filling of jobs (for example, if additional leave provisions are introduced); and
-
Other infrastructure costs.
Key implementation processes
Key processes associated with success in implementing work and family strategies are:
-
Alignment with business objectives and the values of the organisation;
-
Have a measurement and evaluation strategy in place. This is a major indicator of the importance placed on the program: “what matters get measured”;
-
Implementation through a staged process, with pilot programs being developed in key areas;
-
Development of a family-friendly culture. This requires increased knowledge and skill about work and family issues at all levels of the organisation, and a possible shift in reward systems (for example, away from an emphasis on hours worked to a focus on outcomes).
Senior management support;
-
Training for supervisors and management. Short term: focus on work and family; long term: integrate with mainstream management development;
-
Ensure a sense of ownership of policies.
Align with reward systems, establish key result areas for work and family outcomes;
-
Establish community partnerships and link up with community resources;
-
Use different mediums to communicate policies and practices, for example, brochures, videos, presentations, intranet; and
-
Establish work and family ‘champions’ or teams at different locations to monitor progress and provide feedback to management.
Examples of cost/benefit analyses
Top-Draw Consultations and Families at Work (1996) have constructed a five year cost-benefit analysis for the creation of four part-time positions and have estimated that there would be a net benefit of $76 685 (for positions with a salary of $30 000 per annum).
Families at Work have prepared a thorough cost-benefit analysis for the establishment of a 40-place child care centre. The analysis provides for cost savings associated with: reduced staff turnover, reduced absenteeism, reduced length of maternity leave, enhanced recruitment, improved productivity, positive public relations and taxation. They estimate that over a five year period the net benefit for people on non-managerial salaries is $240 498 and for those on managerial salaries it is $1 150 582.
Back to top
To measure your achievements you will have already:
-
Agreed on the indicators you wish to use;
-
Agreed to the means of costing improvements; and
-
Designed and implemented data collection mechanisms.
In developing your work and family strategy you should have:
-
Collected base-line data based on your key indicators;
-
Conducted an opportunity analysis to inform your work and family strategy;
-
Considered your data in more detail to justify particular actions and initiatives;
-
Made specific links between work and family initiatives (for example, part-time employment policy) and indicators/outcomes (for example, parental leave return rate); and
-
Decided at what intervals you will gather further data against the indicators (say, once a year) to enable you to measure your achievements.
If these structures underpin your work and family strategy, measuring your achievements will be a relatively straightforward process, where you compare data collected before the implementation of initiatives, with data collected after the implementation of initiatives. However, it is not without its challenges. Establishing links between work and family strategies is not always transparent, and may be influenced by a myriad of variables – many of which may be external and not within the control of the organisation (for example, a fluctuating economy and labour market).
The evidence supports that the overwhelming majority of organisations do experience benefits from implementing work and family initiatives. And, while an evaluation cannot account for all variables, it will provide you with invaluable information to pinpoint the strengths and weaknesses of your work and family strategy, and your people management strategies more generally.
It is also important to remember that not all savings will be realised immediately, and may occur over a number of years, if not over the lifetime of the organisation. For this reason it is often worthwhile to build in projected savings into your evaluation.
A simple sample evaluation is provided at this link.
Sample evaluation
This sample evaluation is based on just one action and one indicator. In all likelihood you will have devised more than one action and more than one indicator to meet and measure any one of your objectives. This sample does not provide comprehensive costings, but is provided as an example of a layout and components that you may wish to consider adopting.
Objective
To provide workers with greater opportunities to access part-time work on return from parental leave, and to decrease turnover among workers on, or returning from, parental leave.
Action: The development and implementation of a part-time work policy. Date of implementation: 1.1.00
Indicator: Rates of return from parental leave.
Rates of return:
@ 30.6.99 95 per cent for men; 45 per cent for women
@ 30.6.01 95 per cent for men; 53 per cent for women
@ 30.6.02 97 per cent for men; 72 per cent for women
Costs of development and administration of policy:
01/02 $180 000
02/03 $ 80 000
03/04 $ 90 000
Savings in reduced turnover:
01/02 nil
02/03 $120 000
03/04 $435 000
Outcomes: Over a three year period the return rate from parental leave has increased by 2 per cent for male employees, and 27 per cent for female employees. The cost of developing and implementing the policy has been $188 000, with the savings to the company being $555 000. This has resulted in a net benefit of $367 000.
Back to top