Employee return on investment decreased by 12% in 2010

Employee return on investment decreased by 12% in Romania in 2010, according to PwC’s Saratoga Romania 2011 survey, from 1.53 to 1.34. 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.

The results of the study were launched in a Human Resource Conference organized by PwC Romania today.

“In the context of the current economic environment, most of the Romanian companies witnessed a deterioration of their financial results. Adding to that there was a slight increase of the labour costs, as most companies gave up on the practices of unpaid leave or partial employment, which were widely used during the peak of the crisis. Therefore, Romania’s average employee return on investment decreased quite significantly in 2010. This is a worrying sign about Romania’s competitiveness and the local companies should focus on strengthening financial results and labour productivity in order to maintain Romania as an attractive investment destination in Central and Eastern Europe”, stated Peter de Ruiter, Partner, Tax and Legal Services Leader, PwC Romania.

The cost of labour has also increased as a percentage in the overall costs of a company by 10%, from 9.26% of the total costs in 2009, to 10.13% in 2010. However, the costs of labour as a percentage in the overall costs of a company are still low in Romania compared to Western Europe.

These evolutions have brought Romania’s human capital return on investment (1.34) closer to Central and Eastern Europe’s average (1.36), while maintaining a significant advantage in comparison to Western Europe (1.17).

“After an almost freeze of the external hiring rate in 2009, Romanian companies have once again started to recruit externally for all positions, with the rate of external recruitment more than double compared to 2009 (14.1% in 2010 in comparison with 6.7% in 2009). This is yet another proof that the local companies have left behind the survival and bunker mentality witnessed during the crisis of 2009 and have started to replenish their workforce. Yet, given that the turbulent times look set to be with us for quite some time, it is important for local companies to remain lean and agile and maintain a tight grip on costs”, added Peter de Ruiter.

A number of other HR specific actions including almost doubling the number of training hours per employee, now reaching 25 hours/ employee/ year and beating CEE figures, have led to an increase in workforce engagement, also measured within the report through absenteeism and staff turnover metrics.

Looking at the organisational structures, the survey notices the increase in number of employees allocated per manager, of up to 38%. For the case of the HR department itself, a total cost optimisation of 15%, combined with an increased number of employees per HR responsible, were pointed out in the analysis.

The PwC Saratoga Romania 2011 survey presents comprehensive data on specific Human Capital indicators based on data collected from 81 participating companies from five industry sectors (telecom and technology, industrial products, pharmaceutical industry, retail and consumer goods, and banking).

Source: PwC

This article is also available in: Romanian

This post is also available in: Romanian

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