What does the labour efficiency ratio measure?

The labour efficiency ratio is a measure that assesses how effectively an organization utilizes its workforce compared to established standards. Specifically, it evaluates how much quicker or slower staff work in relation to the standard hours set for completing specific tasks or producing goods. By analyzing this ratio, businesses can identify deviations from expected productivity levels, allowing them to take corrective actions if necessary.

This ratio highlights discrepancies between actual worker performance and the performance expected based on standard labour times. For example, a high efficiency ratio indicates that employees are working faster than the standard time, while a low ratio suggests that they are working slower. Understanding this ratio helps management in making data-driven decisions to improve workforce productivity and implement more effective training or processes when needed.

The other choices do not encapsulate the core function of the labour efficiency ratio as effectively—while they may touch on elements of productivity, they do not emphasize the comparison of actual working speed versus the standard set for the tasks as directly as the selected answer does.