Case Study Company CB&M

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CaseStudy Company: CB&ampM

Theimplementation of workplace policies that benefit workers and boostthe retention of employees is critical for the success of the company(Yamamoto 2011, p. 3550). The move towards maintaining a stable andskillful workforce helps in achieving greater benefits and enhancesflexibility of the workplace policies (Punia 2004, p. 81). Currently,CB&ampM has been experiencing challenges in their human resource dueto the continued loss of valuable experienced graduated andemployees. For instance, the number of accounts in CB&ampM is 12while graduates are 4. From the 12 accountants, the company is at thedanger of losing 4 accounts annually. Also, from the 4 graduates, theCB&ampM risks losing 2 of them.

Theloss of graduates and experienced employees pose a major threat tothe company. Usually, loss of experience employees comes at a cost(Rhodes 1972, p.11). Therefore, this report provides a proposal onwhat CB&ampM should do to reduce the losses associated with the lossof graduates and experienced employees. In this report, the currentsituation in CB&ampM will be analyzed and the related loss.Thereafter, a system I will propose a model that will play a majorrole in reducing the loss of graduates and experienced employees.

CurrentSituation

CB&ampMhas employed a total of 16 graduates and experienced accountants, outof which 12 are accountants and 4 are graduates. As per the currentHR statistics, the company loses 4 accountants and 2 graduatesannually.

Theexperienced accountants and graduates are the most critical people inan organization due to their innovativeness and abundance of skills(Srivastavaand Shailesh 2008, p. 45). Their talents and capabilities areindispensable when the company intends to expand and realize greaterprofitability.

Therefore,such loss, as reflected in the figure above has immense effects ondevelopment of a company. The main dilemma therefore remains on howeffective is the human resource management in CB&ampM.

Costof employee leaving

Firstand foremost, it is imperative to know that loss of experiencedemployees in any organization comes at a cost (Kramar2014, p. 1069). When an employee leaves his/her position, replacingnew employees is quite costly in terms of advertisement, recruitment,training and hiring processes. Also, productivity tends to go downdue to reduced input until the new employee catches up with the newtask. Research has shown that many businesses spend over 20 percentof the employee’s salary in replacing an employee who has leftemployment. Therefore, when 6 employees leave, the company willdefinitely suffer huge losses.

CB&ampMshould realize that people and the brand are the most powerfulresources in any organization. If then the company has to choose one,I propose people. Having skillful people translates directly toexcellent brand. This implies that HR management is critical inperformance of an organization. For instance, when an account leaves employment, the company shouldevaluate the losses that the company will make if the person leavesthe company. Therefore, when an experienced and skillful employeeleaves a company, the company suffers in terms of financial costs,costs of getting someone new, brain drain and effect on the morale ofother workers. Given that accountants and graduates are the heart ofbusiness, losing them can severely affect the corporate knowledge andmemory that can in turn affect the ability of the organization indeveloping innovative products and services. An increased proportionof employees leaving affect the morale of the employees who are leftbehind(Messmer, Anne and Connie 2008, p. 78).The impacts can be substantial to the extent of reducing the overallprofitability of the company.

Proposal

Need:Modelto reduce loss of valuable experienced accountants and graduate

Fromthe current situation in CB&ampM, it can be concluded that the HRmanagement may not be doing enough in terms of retention ofemployees. When 6 out of 14 experienced employees leave, the companysuffers a 37.5 percent in reduction of the experienced workforce.When this is translated into monetary values, the loss isinsurmountable. This translates to direct financial losses, braindrain, morale reduction and increased expenses in terms of recruitingnew employees (Mondy, Robert and Mary 2005, p. 76). Therefore, thereis a great need for the company to reduce the number of employee’sleaving the company.

Proposal

ForCB&ampM to realize high employee retention, this report contains aproposal on the most appropriate measures of enhancing employeeretention. In this proposal, the effects of turnover in CB&ampM havebeen evaluated, the turnover drivers evaluated and retentionstrategies proposed.

First,employees can decide to leave the company because of various reasons.Some get jobs that are paying higher than their current jobs, some goback to school and others just decide to quit because of reduced jobsatisfaction. When the employee initiates the turnover, then thiscan be considered as voluntary. The management of voluntary turnoverrequires that the organization understand the root cause of theemployees leaving. The company should ensure that their strategiesare directed at managing turnover amongst the value employees such asexperienced accounts and graduates. In dysfunctional turnover, CB&ampMwill definitely feel since, based on its nature, this kind ofturnover is extremely harmful to the organization as the highperformers exit the company. The skills for these job groups arenormally hard to find and the company can suffer from such turnoverrates.

Theproposed model will entail four main activities

-Effectivetalent management strategy

-PersonalAssessment and Development

-StructuredCareer Planning

-Recognitionand Reward

EffectiveTalent Management

Themost talented employees are key in driving the organization towardsinnovation, experience and exceptional know-how that makes themremain outstanding when compared to the competitors(Dessler2000, p. 34).CB&ampM should therefore focus on the most experienced and skilledindividuals. This will be achieved by identifying the talent earlyand keeping a look-out on the talents within an organization. Thiswill ensure that the valuable employees are identified. The skilledemployees tend to leave the organization since they feel that theirinput is never recognized.

PersonalAssessment and Development

Thevaluable employees should be assessed regularly to determine ingap(Slugoski2009, p. 91).This can be done through performance appraisals and economicempowerment of the employees to study further. The trainings given tothe employees make them develop an attachment with the company, henceless likelihood of leaving.

StructuredCareer Planning

Asthe management in CB&ampM, there should be efforts towardsidentifying the needs of the employees and helping them reach wherethey want to go. It is critical to note in detail where the employeewants to be in 20 years to come. This way, it is very easy to walkwith the employee towards realizing their dreams. As a result, theemployee will also feel part of the company. It is imperative to notethat as management, the employees goals should always be aligned withthe mission and vision of CB&ampM. This is the only way that thecompany will avoid employer-employee conflicts that are a major causeof employee’s exit.

Recognitionand rewards

Inmost cases, the accountants and the graduates can be said to be thebackbone of the company. This is because all the finances and anyother critical decisions depend on their competency in execution.Therefore, upon any successful project or activity, it is criticalfor CB&ampM to be recognizing their employees. A recognized employeeis always a happy employee. Also, rewards are necessary for anysuccessful task undertaken. This ensures that the employees givetheir best first because the company recognizes them, and secondbecause there is a reward that comes with it.

CostBenefit Analysis

Turnovermatters because of three main factors

  • Cost

  • Effects to the performance of business

  • Increased difficulties in human resource management

Cost

Thetable below gives a breakdown of the costs related with employeeturnover.

Table1: EmployeeTurnover

Number Available Loss/year Indirect Cost/Person Direct Cost/Person Direct Value Indirect Value Total Loss

Experienced Accountants

12

4

$ 500,000

$ 150,000

$ 600,000

$ 2,000,000

$ 2,600,000

Graduate

4

2

$ 150,000

$ 150,000

$ 300,000

$ 300,000

$ 600,000

Itcan be observed from the Table 1 above that from the 12 accountantsavailable, the company losses 4 of them. Since each account adds anequivalent direct value of $150,000 and indirect value of $500,000per annum, then the company will lose $600,000 direct value and$2,000,000 indirect value. On the other hand, out of the 4 graduatesavailable, the company is projected to lose 2 of them, an equivalentof 50 percent. Since the direct and indirect values for the graduatesare the same, at $150,000 per year, the company will therefore lose$300,000 direct value and $300,000 indirect value for the lost of thegraduates. This is presented in the figure below

Fromthe figure above, it can be perceived that the company will loseabout $2,300,000 indirect costs and $900,000 direct costs when thegraduates and accountants leave the company. Clearly, these turnovercosts can be alarming and their effects can affect the pre-taxincome.

ProposedSavings

Themodel proposed will help in reducing the costs related to employeesleaving the company. While it is true that employees cannot beprevented from leaving the company, it is also very true that therate of exit can be prevented. From the proposed measures, the belowTable is a representation of the proposed savings.

Table2: ProposedSavings

&nbsp

Number Available

Loss/yr

Proposed reduction

Estimated Direct Savings/ Person

Estimated Indirect Savings/Person

Total Estimated Direct Savings

Total Estimated Indirect Savings

Total Savings

Experienced accountants

12

4

2

150,000

500,000

300,000

1,000,000

1,300,000

Graduates

4

2

1

150,000

150,000

150,000

150,000

300,000

Total

16

6

3

&nbsp

&nbsp

450,000

1,150,000

1,600,000

Theproposed model will help the company save at least $1,600,000. FromTable 2, the proposed model will reduce the number of employeesleaving from 6 to 3. This is a 50 % reduction. The reduction ofexperienced accountants’ exit from 4 to 2 translates to directsavings of $300,000 and indirect savings of $1,000,000. Thegraduates’ exit will reduce from 2 to 1, and this will beequivalent to $150,000 direct savings and $150,000 indirect savings.This is shown in the figure below.

Fromthe figure, it can be observed that the indirect value for graduateswill reduce from $300,000 to $150,000, and for experiencedaccountants from $2,000,000 to $1,000,000. On the other hand, thevalue for graduate will reduce from $300,000 to $150,000 and from$600,000 to $300,000 for experienced accountants.

Thepercentage savings are presented in the pie chart below.

Itcan be perceived that the savings from experienced accountants willbe the highest at 63 percent. This will be followed by indirectsavings for experienced accountants at 19 percent and indirect anddirect savings from graduates at 9 percent each.

Costof Investment

Itis estimated that the cost of investment for the proposed model in$800,000 for indirect costs and $100,000 for direct costs. This isequivalent to a total of $900,000.

Returnon Investment (ROI)

ROIis amongst the most important metric of evaluating viability of aproposed project in business. When applied correctly, ROI is criticalwhen making business decisions on whether the company can take theproject or not. Therefore, in to evaluate the viability of theproposed model of reducing exit of valuable accountants andgraduates, the ROI was evaluated using the below formula.

Therefore,the annual return on funds invested towards enhancing the employeeretention will be at a rate of 78%. This is considerable high andhence favorable. Therefore, the model is viable and it will bebeneficial to the CB&ampM towards enhancing their retention ofexperienced accountants and graduates.

Duration:Timing and Program Evaluation

Thismodel will be implementable in one year while evaluation will be donefor a period of three to five years to determine any successfulcompletions and changes in employee’s exit, recruitment andretention.

Personnel

Themain personnel in charge will be the HR manager and the entire humanresource management department. The HR manager will be the onereporting to the associated CB&ampM partners. He will be backed upby the finance manager.

Discussion

Employeeretention is critical. Even during the tight market conditions forthe jobs, satisfied employees will be motivated to remain with theircurrent employer. At such instances, the management should notoverlook retention management. This is because even when the rate ofunemployment is high, the turnover of the valuable employees stillremains intact and unaffected. Additionally, businesses all over areundergoing impending shortage of their valuable talents.Organizations that can systematically manage retention in bothfavorable and unfavorable times stand the chance to weather suchshortages(Karhan2002, p. 39).

Fromthe analysis, it can be seen that employee exit is costly, affectsthe performance of business and affects the ability of theorganization to manage its processes. The exit of an employee is veryexpensive as it costs company money, time and other resources. Bothdirect costs and indirect costs are incurred whenever a valuableemployee leaves the company. Whenever an employee leaves, the companyspends a lot of money in recruiting and training new employees untilthey pick up completely in their assigned roles(Weiers and Lawrence 2005, p. 67).

Researchlinks high turnover rate to shortfall in the organizationalperformance. For instance, the turnover rate for CB&ampM is 37.5%.This is considerably high bearing in mind that these are theemployees who are most valuable in the organization. Therefore, anymove towards reducing turnover rate can be instrumental in enhancingthe overall productivity and consequent profitability of the company.The high performance HR practices proposed in this report willincrease the market value of the company. This will ensure that thecompany retains its employees and that the rate of recruitment of newemployees is reduced. It is critical to note that when retention isenhanced, recruitment for new employees is reduced, and if it takesplace, then it is carried out in a systematic without fear thatcertain processes are on standstill after an employeeleaves(Bhatnagar2007, p.640).

Opinionsabound on effects of globalization on overall labor markets thatsignals shortage in overall labor supply. According to the reportsby Manpower Inc, the demographic shifts such as entrepreneurialpractices, education and globalization are contributing greatly toemployee exit. However, for CB&ampM to remain competitive bothinternationally and nationally, the developments in strategic humanresource management will be critical. This will ensure that thecompany remains outstanding, innovative and competent in themarket(Boselie2010, p. 10).

Conclusionand recommendations

Thisreport has presented a detailed proposal on how CB&ampM can improvethe employee retention capacity. The model proposed comprised of fourmajor components. These are effective management of talent, personalassessment and development, structured career planning, and finally,recognition and reward. Therefore, it is recommended that CB&ampMimplement these four strategies to enhance its employee retentioncapacity. It is clear that when the talent is well managed throughproper identification of the talents and recognition of outstandingcapabilities amongst the employee is critical. An important point tonote is that all the four strategies are dependent of each other. Forinstance recognition and rewards will only happen after effectivetalent management.

Asit can be observed from the cost benefit analysis, the new proposedmodel is economical and its delivery of the return to the companyindisputable. An ROI of 78 percent is quite favorable implying theneed to adopt the new model.

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