Software that calculates answers to one or more of the following exercises can be found at http://hrcosting.com/hr/ .

1. Ups and Downs, Inc., a 4,000-employee organization, has a serious turnover problem, and management has decided to estimate its annual cost to the company.

Following the formulas presented in Figures 4-3 , 4-4 , and 4-5 , an HR specialist collected the following information. Exit interviews take about 45 minutes (plus 15 minutes preparation); the interviewer, an HR specialist, is paid an average of

$31 per hour in wages and benefits; and, over the past year, Ups and Downs, Inc., experienced a 27 percent turnover rate. Three groups of employees were primarily responsible for this: blue-collar workers (40 percent), who make an average of $33.20 per hour in wages and benefits; clerical employees (36 percent), who make an average of $18.50 per hour; and managers and professionals (24 percent), who make an average of $44.75 per hour. The HR department takes about 90 minutes per terminating employee to perform the administrative functions related to terminations; on top of that, each terminating employee gets two weeks’ severance pay. All this turnover also contributes to increased unemployment tax (old rate = 5.0 percent; new rate = 5.4 percent); because the average taxable wage per employee is $22.90, this is likely to be a considerable (avoidable) penalty for having a high turnover problem