Prepare a policy
position that addresses the issue, “Does it make sense to invest in the
productivity improvements offered by the HR module?”
Suppose that you apply
the maximums to recruiting and training. Here are the costs:
1.
Recruiting costs per
new worker are $5000.
2.
Each employee trains
80 hours per year at $20 per training hour
3.
Workforce complement
increases by 4.2% to cover the 80 hours people are in training.
For this exercise you
need a spreadsheet and both the Capstone Courier and Annual Report. Use the
Round 2 reports for the analysis. Human Resources statistics like workforce
complement and turnover are on Courier page 12. Use Annual Report Income
Statement’s total Labor cost to estimate payroll costs.
Assume the following
productivity payoffs:
1.
Round 1 – 102%
2.
Round 2 – 105%
3.
Round 3 – 108%
4.
Round 4 – 112%
5.
Round 5 – 115%
6.
Round 6 – 118%
Therefore, in Round 6 each worker would be 1.18
times as effective as the beginning worker, and your workforce complement would
fall to 1/1.18 or 85% of its current level.
For a quick evaluation, assume your total labor expenditure from the Annual
Report Income Statement will stay flat for the next six years.
How much of a cost savings might you expect in
the sixth year? For example, if the total labor costs on the Income Statement
says $29M, and costs stay the same for six years, then in the last year your
costs would fall to $29/1.18 M. Apply the same approach to years one through
five to get a total savings over time.
Would this justify the necessary expenditures in recruiting and training made
over time? Assume a turnover of 10% and no increase in workforce size. Since
you are sending workers to training for 80 hours or two weeks each year, you
also need to expand the workforce enough to cover the workers that are in
training. We are looking for a ballpark answer, not a precise answer, so that
you can decide whether or not a payoff in HR productivity justifies the
expense.
So far we have
assumed our workforce and labor contracts are constant. In practice the market
is growing at about 14%, and your labor contract has a 5% wage escalator. How
does this affect the numbers? At what level, if any, would you recommend that
your company invest in recruiting and training? Are there any factors beyond
the simple numbers that should be considered?
Length: 1 – 2 pages of
analysis not including title page and references as well as all of the
calculations that you generated to come up with your solution.
Your response should demonstrate thoughtful consideration of the ideas and
concepts presented in the course and provide new thoughts and insights relating
directly to this topic. Your response should reflect scholarly writing and
current APA standards. Please use at minimum of three outside scholarly sources
for support.
