ASSIGNMENT | Does it make sense to invest in the productivity improvements offered by the HR module?

Instructions
See attached examples/instructions

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.

SAMPLE SOLUTION

It is advisable for the company to derive a policy that deals with payment of its workforce in case they undertake their duties overtime. Such a position will ensure that the morale of the worforce. Boosting the worker’s morale is important as it enhances better performance in any organization. All this is geared towards enhancing efficiency and increase productivity. Another policy is ensuring that employees are trained on issues to do with ethics as well as how to conduct themselves in all aspects of the company. Furthermore, it is important for employees to be updated on corporate social responsibilities that the firm engages in so as to ensure that it makes a positive impact to the outside environment. Training will also ensure that employees are competent and carry out all issues with decency…