## Labour Efficiency, Productivity, and Special Worker Categories
### Level of Efficiency (LOE)
$$\text{LOE} = \frac{\text{Time Allowed (Standard Time)}}{\text{Time Taken (Actual Time)}}$$
- LOE ≥ 1 → worker is efficient (finished in standard time or less).
- LOE < 1 → worker is inefficient (took more than standard time).
### Efficiency Rating Procedure
1. Determine standard time using time and motion study.
2. Record actual performance — actual output and actual time taken.
3. Compute LOE using the formula above.
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### Labour Productivity
$$\text{Labour Productivity} = \frac{\text{Standard Time for doing actual amount of work}}{\text{Actual Time Taken}}$$
Used to measure effectiveness in utilisation of men, money, and material.
Factors for increasing labour productivity:
1. Employ the right person with the right skill.
2. Place the right person on the right job.
3. Provide appropriate training to both young and experienced workers.
4. Avoid excess or shortage of labour at all times.
5. Simplify and standardise jobs through study.
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### Job Evaluation vs Merit Rating
| Dimension | Job Evaluation | Merit Rating |
|---|---|---|
| What is rated? | The job (not the person) | The worker (job-holder) |
| Basis | Responsibility, skill, effort required for the job | Actual performance of the individual employee |
| Purpose | Fix basic wage/salary for a job | Determine fair wages for each specific worker |
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### Time Study and Motion Study
Time Study: Determines the standard time required by an average worker to perform a task. Conducted using a stopwatch.
Motion Study: Closely observes the movement of men and materials to eliminate unnecessary movements, increasing production. Conducted using a camera.
Importance to management:
1. Improves workflow → effective use of men, money, and material.
2. Eliminates unnecessary movement → reduces fatigue.
3. Achieves high levels of efficiency.
4. Sets standard time for labour cost control.
5. Forms the basis for introducing fair incentive schemes.
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### Casual Workers
Workers employed temporarily for a short duration when:
- Permanent labour force is insufficient to meet required output, OR
- Regular workers are on leave due to illness or other reasons.
Treatment in cost accounts:
- If casual workers do direct work → treat wages as direct labour cost (part of prime cost).
- If casual workers do indirect work → treat wages as production overhead.
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### Outdoor Workers
Workers who do not work in the factory — they work at their homes or at customer sites.
Two categories:
1. On regular roll: Given raw material to work at customer's site as per management instruction.
2. Not on regular roll: Given raw material to work from home.
Control measures for outdoor workers:
1. Reconcile materials issued with output produced.
2. Verify completion of task within given time.
3. Conduct surprise checks to confirm physical presence at home or customer site.