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Measuring Return on Labor Investment

The trade group for cable’s human-resources executives has prepared a new report, attempting to quantify the amount spent on employees and the impact of that expense on the bottom line for operators and programmers.

Findings include a relatively high rate of profit measured against labor costs — and a relatively high rate of voluntary departures by employees, possibly moving to competitors.

The benchmark is based on data from only 15 companies — multiple-system operators and programmers that agreed to participate. Companies paid $2,240 to participate and receive complete reports on the resulting metrics from the survey commissioned by the Cable and Telecommunications Human Resources Association.

Lisa Chang, CTHRA vice president and executive vice president at The Weather Channel, said participants in the survey included A&E Networks, Advance/Newhouse Communications, Charter Communications Inc., Comcast Corp., C-SPAN, Discovery Networks U.S., ESPN, PBS, QVC, Scientific-Atlanta, Scripps Networks, Starz Entertainment Group, The Weather Channel, Time Warner Cable and Turner Broadcasting System.

The Human Metrics Survey found participating companies have a human capital return on investment — the pre-tax profit for each dollar invested in employee compensation and benefits — of $3.24. By comparison, the general median across industries is $1.24.

Participating companies spend just 14.61% of their budgets on labor costs, compared to 29.3% across industries.

The percentage of employees who leave jobs in cable is higher than the general cross-industry rate, according to the study. Annual voluntary turnover at the operators and programmers is 12.61%, against 10.5% across industries in general.

Chang called the voluntary departure rate a concern. “As an industry, that’s a wake-up call regarding the need to attract and retain talent. The telcos are ready to snatch those people away at a moment’s notice,” she said.

Current participants provided data on such metrics as human capital return on investment, manager ratios, ethnic diversity and income spent per employee.

The study was done using Saratoga, an online measurement tool used by the PricewaterhouseCoopers Human Resources division.