Week 3 – Assignment 2: Calculate Investing in Productivity Improvements (HR)

Instructions
Prepare a policy position that addresses the issue, “Does it make sense to invest in the productivity improvements offered by the HR module?”  Access the Spreadsheet in this week’s Resources titled Activity 3 ROI Analysis.
For this exercise, you need the 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 rate are on Courier page 12. Use Annual Report Income Statement’s total Labor cost to estimate payroll costs.
Listed below are the assumptions for this exercise:
These are the maximums for recruiting and training costs:
Recruiting costs per new worker are \$5000.
Each employee trains 80 hours per year at \$20 per training hour.
Workforce complement increases by 4.2% to cover the 80 hours people are in training.
Assume the following productivity payoffs:
Round 2 – 102%
Round 3 – 105%
Round 4 – 108%
Round 5 – 112%
Round 6 – 115%
Round 7 – 118%
Therefore, in Round 7 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 6 years.
Part 1: Using this week’s course readings and supplemental readings, summarize (1-2 paragraphs) the importance of reviewing ROI for investments in human resources
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?
Resources:  Supplement this weeks’ readings with a minimum of one additional scholarly article.
Your presentation should demonstrate thoughtful consideration of the ideas and concepts presented in the course and provide new thoughts and insights relating directly to this topic. Your response should reflect scholarly writing and current APA standards. Be sure to adhere to Northcentral University’s Academic Integrity Policy.

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