Calculate Investing in Productivity Improvements (HR)

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Business Finance

Description

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 two outside scholarly sources for support

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Top HRTQM Report CAPSTONE. COURIER C101250_033 Round: 2 December 31, 2020 HUMAN RESOURCES SUMMARY Andrews Chester Erie 701 Needed Complement Complement 1st Shift Complement 2nd Shift Complement Baldwin 687 687 551 Digby 916 916 716 716 701 Femis 846 846 541 892 892 650 243 640 678 61 135 238 178 305 0.0% 0.0% 0.0% 0.0% 0.0% 8.9% 10.0% 70 8.9% 61 9.1% 164 0.0% 9.1% 65 8.9% 271 202 Overtime% Turnover Rate New Employees Separated Employees Recruiting Spend Training Hours Productivity Index 0 116 $2,000 30 0 $2,000 0 $2,200 $0 0 $2,000 25 100.0% 0 $2,500 30 100.0% 100.0% 100.0% 100.0% 100.0% $868 $709 Recruiting Cost Separation Cost Training Cost Total HR Admin Cost $70 $0 $0 $70 $183 $582 $412 $1,177 $493 $0 $446 $939 $0 $550 $1,417 $195 $191 $358 $744 $0 $508 $1,216 Labor Contract Next Year Wages Benefits Profit Sharing Annual Raise $23.15 2,500 2.0% 5.0% $23.15 2,500 2.0% $23.15 2,500 2.0% $23.15 2.500 2.0% 5.0% $23.15 2,500 2.0% 5.0% $23.15 2,500 2.0% 5.0% 5.0% 5.0% L e D Baldwin Ferris Chester 6.49% Erie 5.25% 5.59% Digby 6.45% 1.19 7.70% 6.85% 1.37 1.06 0.97 5.90% 8.09% 5.07% 9.35% 2.04 12.04% 1.97 15.93% 1.99 15.34% 10.39% $0 $ 119,331,545 $ 82,788,618 $ 11,815,969 $ 16,780,130 $ 6,265,842 $ 16,004,400 $ 44.19 $ 94,042,746 $0 $ 123,236,566 $ 80,786,481 $ 17,376,017 $ 17,276,399 $ 6,886,690 $ 20,017,277 $ 50.15 $ 102,626,047 B $ 20,723,506 61.4 $ 8,283,719 $ 115,600,000 $ 116,733,073 103.67% Industry C101250_033 selected statistics for round 2 Andrews ROS 2.81% Asset Turnover 0.80 ROA 2.26% Leverage 1.80 ROE 4.05% Emergency Loans $0 Sales $ 86,869,369 Variable Costs $ 65,277,039 $ 4,306,892 EBIT $9,198,771 Profit $ 2,437,430 Cumulative Profit $ 8,719,389 Stock Price $ 32.13 Market Capitalization $ 74,649,154 S&P Rating BB Working Capital $ 34,205,887 Days of Working Capital 143.7 Free Cash Flow $-4,547,334 Plant and Equipment $ 113,800,000 Total Assets $ 108,046,434 Plant Utilization 79.50% Traditional Segment Share 10.67% Low End Segment Share 17.33% High End Segment Share 4.81% Performance Segment Share 10.23% Size Segment Share 6.62% Overall Market Share 12.11% Complement 701 Overtime 0.00% Turnover Rate 10.00% Productivity Index 100.00% 1.98 18.55% $0 $ 145,259,535 $ 100,294,970 $ 18,708,745 $ 21,057,476 $9,951,361 $ 21,494, 106 $ 54.73 $ 109,464,955 $ 22,497.785 $ 155,814,549 $ 160,682,377 $ 108,952,999 $ 109,931,897 $ 16,676,776 t $ 19,584,602 $ 22,390,947 $ 23,314,809 $ 10,112,699 $ 10,362,559 $ 19,073,090 $ 21,800,941 $ 50.78 $ 55.35 $ 105,084,341 $ 113,363,964 B B $ 26,462,289 $ 22,524,615 62.0 51.2 $ 9,621,469 $-9,219,011 $ 116,700,000 $ 128,900,000 $ 124,998,972 $ 134,559,305 139. 19% 132.51% 15,92% 16.87% 19.20% 15.31% 21.09% 22.10% 28.12% 27.24% 26.69% 20.02% 18.90% 916 0.00% 0.00% 9.06% 8.88% 100.00% 100.00% $ 3,285,415 $ 90,000,000 $ 106,382,071 156.36% $ 19,385,537 59.3 $ 5,448,303 $ 125,318.000 $ 123,526,448 115.25% 31.06% 18.18% 0.62% 1.96% 3.47% 17.06% 13.58% 11.91% 17.38% 30.41% 4.43% 8.62% 15.20% 687 0.00% 12.60% 20.97% 27.37% 27.36% 16.71% 0.00% 0.00% 9.06% 100.00% 100.00% 100.00% . 177 177 9797 | Email: sunnort@capsim.comAddress: 55 E Monroe, Suite 3210 Chicago, IL 60603
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Investing in Productivity Improvements
The company is required to come up with the policy that shall show hoe employees are going to be
remunerated for the work done during overtime. When employees shall be considered for payment for
the overtime work done, they shall get motivated and the efficiency and work output is going to
increase. Employees are required to get trained so as to help them relate in their work stations ethically
with improved code of conduct. Thorough training is required to be offered to any new employee
enrolled in this sector so that to bo...


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