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1、The Human Resources screen tracks the cost of hiring and firing workers.A company will need new workers when Production schedules are increased. A company will need fewer workers when Automation is increased and / or Production schedules are decreased. Needed Complement Your plant has set of product
2、ion lines, one line for each product. Each line contains a workstations, and a worker staffs each station. Each line has a Capacity, which is defined as the number of units that can be produced on a single shift. Needed Complement The plant can work into the night by adding workers to a 2nd shift. 2
3、nd shift costs are 50% more than straight time (the first eight hours of the 1st shift). On any given line, if you schedule a production run in excess of your 1st shift Capacity, a 2nd shift will be hired. Needed Complement Increasing Capacity will reduce the number of workers on the 2nd Shift, and
4、therefore decrease labor costs. However, increasing Capacity will not decrease the overall Needed Complement. Recruiting Costs Recruiting costs are incurred when new workers are hired. Recruiting costs average $1,000 per worker. Separation Costs Decreasing Production schedules, whether it is because
5、 Capacity has been sold, or production curtailed to sell excess inventory, will result in lay-offs.Separation Costs are generated when workers are laid-off. Separation costs average $5,000 per worker.Your professor has the option of enabling an advanced Human Resources Module. When activated, three
6、areas will be addressed:Complement the number of workers in the workforce. Needed Complement is the number of workers required to fill the production schedule without Overtime (Figure 1). Figure 1 The desired Complement is entered in the This Year Cell on the Production Screen. Note: If the This Yea
7、r Cell is colored red, you have too many employees!Caliber the talent of the workforce. If teams are willing to spend the money, they can recruit a higher caliber of worker. This results in higher Productivity and lower Turnover. Teams set a Recruiting Spend budget of up to an additional $5,000 per
8、worker (Figure 2). If they spend nothing extra, their recruitment cost per worker remains at $1,000 and they get an average person off the street. The more they spend, the higher the caliber of the worker.Figure 2 Recruiting Spend and Training Hours are entered on the Human Resources screen. Trainin
9、g the amount of time workers spend in training each year. Training leads to higher Productivity and lower Turnover, but takes people off the job while they are in training. Teams set Training Hours (Figure 2). Each training hour costs $20 per worker.Youll be addressing these issues from an executive
10、s perspective. Your decisions can have a substantial impact on your companys performance.Think of your plant as set of production lines, one line for each product. Each line contains a number of workstations, and a worker staffs each workstation. Each line has a Capacity, which is defined as the num
11、ber of units that can be produced on a single Shift (if every workstation were staffed). The plant can work into the night by scheduling Overtime, or by adding workers to a 2nd Shift. Both overtime and 2nd Shift costs are 50% more than straight time (the first eight hours of the 1st Shift). The Able
12、 line has a Capacity of 1,800,000 units (shown as 1,800 on the Production spreadsheet). If the company chooses to build only 900,000 units (900 on the spreadsheet), it would logically cut back on the number of workers it employed (however Separation Costs would be incurred). Concurrently, if the com
13、pany chooses to build 2,000,000 units (2,000 on the spreadsheet) it could: a. Keep the number of workers constant. This means employees will have to work Overtime hours with a wage rate of an additional 50%. Running Overtime allows companies to avoid hiring and training costs, but Overtime wears out
14、 the workforce, leading to reduced Productivity and higher Turnover. Higher Turnover increases future Recruiting Costs; or b. Consider paying the Recruiting Costs and hire a 2nd Shift. 2nd Shift workers are paid the same wage rate as 1st Shift workers on Overtime (an additional 50%), however 2nd Shi
15、ft workers are more efficient than 1st Shift workers on Overtime (they arent as tired) and the employee Turnover Rate is lower (they are not disgruntled by the extra hours). Lower Turnover reduces future recruiting costs.This is how the Production Screen looks when the HR Module is enabled. The gree
16、n This Year cell requires an entry. In this example the Needed Complement of 909 workers has been entered in the This Year cell.Note the production line Capacities in the figure above: 1,800 for Able, 1,400 for Acre, 900 for Adam and 600 each for Aft and Agape (these numbers are in thousands of unit
17、s). The number of workers required will vary depending on the number of units built per year (companies can build up to twice the Capacity of each line) and Automation levels (higher Automation levels mean fewer workers are needed). For this discussion Capacity and Automation levels will remain cons
18、tant. The figures below show the Production and the Human Resources screens where production scheduled equals Capacity (1,800, 1,400, 900, 600, 600) and the Needed worker Complement is hired (909). Note that there is no Overtime, and that 2nd Shift reads 0. The Human Resources screen reflects the in
19、formation that has been entered on the Production screen. It also shows a Turnover Rate of 10% and Productivity Index of 100%. In the figure below the production schedule has been increased by 200,000 for each product line (2,000, 1,600, 1,100, 800, 800). The increased production jumps the Needed Co
20、mplement to 1,087, but the Workforce Complement has been held at 909. The result, 19.6% Overtime.On the Human Resource screen the Turnover Rate is now 12%, up from 10%. In the figure below the Needed Complement of 1,087 is entered in the This Year column. The result, Overtime has dropped to 0% and t
21、he 2nd Shift now employs 178 people.On the Human Resources screen the staffing Complement of 1,087 returns the Turnover Rate back to 10%. Note, however, that the Recruiting Cost row has been steadily creeping up $299,000 on page 3, $317,000 in page 4 (because the Turnover Rate rose to 12%) and $495,
22、000 on this page (due to the hiring of the 2nd Shift).In the figure below This Years Complement has been dropped to 600. Now there is no 2nd Shift and the 1st Shift is working 80.6% Overtime.On the Human Resources screen Turnover jumps to 18.1%. Recruiting Cost has dropped to $108,000, but there is
23、now a Separation Cost (the cost of firing the extra workers) of $505,000.In the figure below This Years Complement is entered as 1,150, which is above the Needed Complement of 1,087. Overtime is now back to 0% and the 2nd Shift returns to 178.On the Human Resources screen the Recruiting Cost has sky
24、rocketed to $564,000, but the Total HR Admin Cost is somewhat less than when the workforce was reduced to 600 (Page 6).Is there ever a reason to add extra workers? Yes, if the company plans to improve Productivity and reduce Turnover with training. In figure below each worker has been assigned 80 ho
25、urs of training per year.Note that the Needed Complement has jumped to 1,130, and there is now a Training Cost of $1,840,000. However, Turnover has dropped to 7%. Part of the expense of the extra wages and training will be offset by lower Recruiting Costs and future gains in Productivity.Note: In th
26、is example the Productivity Index remains at 100%. This is due to the 529 Employees added this year. Had fewer employees been added the 80 Training Hours would have increased the Productivity Index. In this figure $2,000 has been entered in Recruiting Spend (the amount of money spent per worker to a
27、ttract a higher caliber worker). Note that the Productivity Index has increased almost 2% to 101.8. Part of the extra recruitment expense will be recouped by increased production line efficiency. Human Resources ReportAfter the round is processed the results of all HR investments appear on Page 12 o
28、f the Capstone Courier in the HR/TQM Report (go to the Last Years Reports pull-down menu and select HR/TQM rpt).Human Resources Report Human Resources DefinitionsComplement: The number of workers in your workforce this year. This years workforce Complement is entered on the Production spreadsheet an
29、d appears in the top row of the Human Resource spreadsheet.There are two shifts. As you add workers, the 1st Shift is completely filled, then the 2nd Shift begins to fill. Suppose that you do not have enough workers? The 1st Shift must then work Overtime to complete the work schedule. Excessive Over
30、time drags down Productivity and increases Turnover.2nd Shift and Overtime workers cost 50% more per hour than workers on 1st Shift. Needed Complement: The number of workers needed this year if you are to avoid Overtime.1st Shift Complement: As you increase the workforce, the simulation completely f
31、ills the needed 1st Shift Complement before adding 2nd Shift workers.2nd Shift Complement: The number of workers on 2nd Shift. 2nd Shift workers are paid 50% more per hour than 1st Shift workers. 2nd Shift scheduling has no impact upon the Productivity Index.Overtime %: The percentage of 1st Shift w
32、orkers on Overtime. 100% means that every 1st Shift worker is working a double Shift. 15% means that, on average, each 1st Shift worker performs 15% Overtime.Overtime increases Turnover and drags down Productivity.Turnover Rate: The percentage of workers who left the company last year, excluding dow
33、n-sizing. About 5% is rooted in unavoidable factors like retirement, relocation and weeding out poor workers. Remaining Turnover is a function of employee dissatisfaction. The best workers leave first.Turnover is driven down by Recruiting Spend and Training Days (the green input cells on the Human R
34、esources spreadsheet). Turnover also goes up as a result of Overtime and a substandard compensation package from the Labor Negotiation.Note: The Turnover Rate ignores down-sizing factors. It reflects the Turnover in the population of workers that you keep after down-sizing (that is, after the sale o
35、f production Capacity).New Employees: Employees recruited this year. At a minimum, New Employees reflects replacements for workers lost during the course of the year to Turnover. It also includes workers hired in January to increase the Complement from last year. New employees incur a Recruiting Cos
36、t.Note: As a simplifying assumption, the simulation does not rehire fired or separated workers.Separated Employees: Employees lost because of down-sizing or increases in Automation. Specifically, Separated Employees is Last Years Complement minus This Years Complement. All separations occur in Janua
37、ry and incur a Separation Cost.Recruiting Spend: Recruiting Spend (the first green input cell) is the extra amount budgeted per worker to recruit high caliber workers. The higher the budget, the better the worker, resulting in a higher Productivity Index and lower Turnover. Your entry is added to th
38、e base amount of $1,000 per new employee.$0 means no extraordinary effort is spent recruiting new people. Diminishing returns apply after $5,000 per worker.Tip: It may take several years to see a significant impact, but the effect is cumulative. Minimum Turnover is 5%. If you replace 5% of the workf
39、orce each round with high caliber people, after 8 years you would replace a significant percentage of your workforce with high caliber workers.Training Hours: Training Hours (the second green input cell) is the number of hours each year that each individual worker is taken off-line for training and
40、development. Training produces a higher Productivity Index and lower Turnover Rate. The more time off-line, the higher the needed Complement. Each training hour costs $20 per worker in additional training costs.For example, 40 means that each worker will spend 40 hours in training this year.Producti
41、vity Index: The Productivity Index indicates how the general workforce compares with the workers employed in Round 0. 100% means that current workers are just as good as original workers. 110% means that, on average, you only need 91% (100% / 110% = 91 %) of the workforce Complement to do the same w
42、ork as a workforce comprised of original workers. In short, higher productivity means fewer workers are required to do the work, and that drives down per unit labor cost.Recruiting Spend and Training Days drive up the Productivity Index. Overtime and Turnover drag down the Production Index.This Year
43、 actually means by the end of this year. Last years productivity is the driver behind your complement requirements this year, because it indicates your productivity level on January 1st.Recruiting Cost: The amount spent to recruit new workers. Equals the number of workers recruited times ($1000 + Re
44、cruiting Spend). Separation Cost: The cost to separate (layoff) workers. If you down-size your workforce (by selling Capacity or increasing Automation), each worker is given a separation package worth $5000.Training Cost: Training costs are driven by Training Hours. Each worker-training hour costs $
45、20 and pay for such things as educational materials, instructors, etc. Training costs do not include time off the job.Total HR Admin Costs: Total HR Admin Costs are incorporated into the Income Statements Admin line item. Costs are allocated to products based upon their Complement. For example, if Able has 10 workers and Acre has 20, then the HR Admin costs (training, recruiting, etc.) would be twice as much for Acre as for Able.
