1. These are the maximums for recruiting and training 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.
2. Assume the following productivity payoffs:
   1. Round 2 - 102%
   2. Round 3 - 105%
   3. Round 4 - 108%
   4. Round 5 - 112%
   5. Round 6 - 115%
   6. Round 7 - 118%

Part 2: How much of a cost savings might you expect in the seventh year? What are the savings for all 6 years? What are the recruiting and training costs? Would the total cost savings justify the necessary expenditures in recruiting and training made over time?

Part 3: Assume your turnover rate doubles and no increase in workforce size. Are the Recruitment and training costs still justified?

Transcribed Image Text:

INPUTS Total labor expenditure (direct labor) from Annual Report Income Statement # of employees - Round 2 399 Turnover Rate 10.0% RECAP 19,426 Insert these three numbers from CAPSIM * Total Labor for Round 2 Income Statement in the Annual Report (not the Courier) * # of Employees from Complement # on HR Summary, p.12 of the Courier * Turnover Rate from Round 2, p.12 of the Courier SAVINGS (Rows 21-26) COSTS $ 10,323 RECRUITING COST (Rows 32-37) $ 840,000 TRAINING COSTS (Rows 42-47) $ 268,800 WORKFORCE COMPLEMENT TO COVER TRAINING $ 4,462 COSTS (Rows 52-57) TOTAL COSTS $ 1,113,262 NET SAVINGS $ (1,102,938) SAVINGS A Productivity Payoffs B Total labor expenditure (direct labor) from Annual C = B/A Total Labor Complement D= B-C Savings Report Income Statement Round 2 1.02 $ 19,426 $ 19,045 $ 381 Round 3 1.05 $ 19,426 $ 18,501 $ 925 Round 4 1.08 $ 19,426 $ 17,987 $ 1,439 Round 5 1.12 $ 19,426 $ 17,345 $ 2,081 Round 6 1.15 $ 19,426 $ 16,892 $ 2,534 Round 7 1.18 $ 19,426 $ 16,463 $ 2,963 $ 116,556 $ 106,233 $ 10,323 COSTS RECRUITING COST E = # employees/A # of employees given increase in productivity F = Difference in # employees from previous round Difference in # employees Round 2 399 391 < Round 3 Round 4 372 G = F/E H I = (H-G)*E J K = lxJ Turnover # Employees need to hire Recruiting cost per Total Recruiting cost employee $ 2% 19 5% 10.0% 10.0% 39 $ 37 $ 5,000 $ 5,000 $ 195,000 185,000 INPUTS Total labor expenditure (direct labor) from Annual Report Income Statement # of employees - Round 2 399 Turnover Rate 10.0% RECAP 19,426 Insert these three numbers from CAPSIM * Total Labor for Round 2 Income Statement in the Annual Report (not the Courier) * # of Employees from Complement # on HR Summary, p.12 of the Courier * Turnover Rate from Round 2, p.12 of the Courier SAVINGS (Rows 21-26) COSTS $ 10,323 RECRUITING COST (Rows 32-37) $ 840,000 TRAINING COSTS (Rows 42-47) $ 268,800 WORKFORCE COMPLEMENT TO COVER TRAINING $ 4,462 COSTS (Rows 52-57) TOTAL COSTS $ 1,113,262 NET SAVINGS $ (1,102,938) SAVINGS A Productivity Payoffs B Total labor expenditure (direct labor) from Annual C = B/A Total Labor Complement D= B-C Savings Report Income Statement Round 2 1.02 $ 19,426 $ 19,045 $ 381 Round 3 1.05 $ 19,426 $ 18,501 $ 925 Round 4 1.08 $ 19,426 $ 17,987 $ 1,439 Round 5 1.12 $ 19,426 $ 17,345 $ 2,081 Round 6 1.15 $ 19,426 $ 16,892 $ 2,534 Round 7 1.18 $ 19,426 $ 16,463 $ 2,963 $ 116,556 $ 106,233 $ 10,323 COSTS RECRUITING COST E = # employees/A # of employees given increase in productivity F = Difference in # employees from previous round Difference in # employees Round 2 399 391 < Round 3 Round 4 372 G = F/E H I = (H-G)*E J K = lxJ Turnover # Employees need to hire Recruiting cost per Total Recruiting cost employee $ 2% 19 5% 10.0% 10.0% 39 $ 37 $ 5,000 $ 5,000 $ 195,000 185,000