Employee return on investment (HC ROI) decreased by 9% in Romania in 2011, according to this year's edition of the PwC Saratoga studyPublish date: 07-11-2012
Employee return on investment remained on a downwards trend in 2011 and decreased by 9% compared to 2010, according to PwC's Saratoga Romania 2012 survey, from 1.34 to 1.22. The indicator measuring the Human Capital Return on Investment shows the pre-tax revenue produced by an employee for every monetary unit (e.g.euro, dollar, or RON) paid out in remuneration. In the same time, the cost of labour has also increased as a percentage in the overall costs of a company by 13%, from 10.13% in 2010 to 11.45% in 2011.
"Unfortunately, Romanian companies were confronted last year with a deterioration of profitability, correlated with an increase in labour costs. Therefore, the human capital return on investment in Romania has lagged behind the Central and Eastern European average, where this indicator stands at 1.57. This impacts Romania's competitiveness and its attractiveness as an investment destination. Any reversal of the situation would require keeping labour costs under tight watch, so that any future wage increase is connected to productivity gains, or is even smaller”, stated Horatiu Cocheci, Human capital advisory team leader, PwC Romania.
"If overall the labour return on investment indicators deteriorated, there were sectors in which we could see an improvement in the financial and human capital efficiency indicators in 2011. As such, we noticed productivity gains in information technology and telecom. However, these indicators deteriorated severely in banking, fast moving consumer goods and industry”, added Horatiu Cocheci.
As for employee turnover, this is getting closer to Central and Eastern Europe's average, with 15.6% of the employees quitting their jobs in 2011 (the CEE average is 16.7%), which is a proof of a normal rate of employee turnover and a recovery of the labour market. On the other hand, there are significant differences between various economic sectors. In retail, employee turnover is particularly high (41.3%), while in industry only 7.6% of the employees quit the organizations for which they worked last year, less than half the national average. Moreover, 74% of the separations are voluntary, through resignations (while the CEE average is of 63% voluntary separations), similar to last year.
In the last four years, in an attempt for cost optimization, companies restructured their departments. The most significant change came in the administrative department, where from a ratio of one employee with an administrative function to 31 employees, the ratio changed currently to one in 91 employees. This has also been the case for departments with a high degree of complexity which have been restructured with the reduction of internal employees, an example being the legal department where some legal services were outsourced. On the other hand, IT specialists were in high demand, with their share in organizations growing from 1 IT specialist to every 87 employees, to 1 in every 58.
In terms of absenteeism, Romania is amongst the EU countries with the lowest reported level (1,4%), 3 times smaller than the CEE average (4,3%). Last year, training hours dropped to only 15 hours per employee, compared to 25 hours in 2010. As for the training expenses, these are now of 144 EUR per employee, under the CEE average of 186 EUR per employee.
The PwC Saratoga Romania 2012 survey presents comprehensive data on specific Human Capital indicators based on data collected from 84 participating companies from eight industry sectors (telecom, technology, industrial products, pharmaceuticals, retail, fast moving consumer goods, tourism and leisure and banking).
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