Reducing the Cost of Turnover

Case Study 1
Brittney Lensch

1.) Are the calculated benefits of reduced turnover sufficient to justify the $680,000 in increased costs associated with the expansion of the Human Resource Department?   Would your answer be the same if “reduced productivity during the learning period” was excluded from the analysis?

After calculating the reduction in turnover costs it appears to me that this chart will be more than sufficient to present to the Board of Directors.   It shows the complete breakdown of where the cost is going when we don’t manage the turnover.   As shown in exhibit 1.8 they break it down into subcategories which include separation costs, replacement costs, training costs, and then reduced productivity during learning period.   These are where most of the costs are going to due to the fact of the high turnover rate prior to Williams starting.   At a separate sheet of paper you will notice my calculations of the High Employee Retention rate which is significantly greater than previous years.   If we would take out the reduced productivity during the learning period it would decrease the savings because if you really look at the whole picture in order for someone to catch on they will need months of training, so if you lose someone and then have to train a new person you are then losing the productivity within training the new employee.   With that being said the cost have gone down quite drastically in which you will see and that is due to the high retention rate that Williams and her team have brought to the table.

2.) In addition to improved employee retention, what are some other areas of potential economic benefit to the organization from having a Human Resource Department?   What calculations would you do to prove such benefits?

There are multiple aspects that an organization could benefit from having an HR Department, but two stick out to me and that is the benefit programs and the training and development aspect of the department.   The...