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Evaluating The Financial Impact Of Human Resources Management Activities:

544 words - 3 pages

Exercise: Evaluating the Financial Impact of Human Resources Management Activities:
Reduced Turnover Costs
Walden University

1. Calculation of Benefits of Higher Employee Retention Using a Base of Year 1
1. Number of employees: Reduction in turnover with a base of year 1
Example: Number of executives in year 2 have been calculated:
12.8 – 11.5 = 1.3 % (0.013) ( 127 x 0.013 = 1.651 = 2
|Personnel Category |Years | | |
| |2 |3 |4 |
|Executive (n=127) |2 ...view middle of the document...

00 |$59,187.50 |$71,025.00 |$154,266.50 |
|Physician |$28,967.00 |$14,483.50 |$130,351.50 |$173,802.00 |
|Other Professional |$19,299.00 |$173,691.00 |$276,619.00 |$469,609.00 |
|Non-Professional |$77,627.00 |$52,927.50 |$134,083.00 |$264,537.50 |
|All Categories |$149,947.00 |$300,289.50 |$612,078.50 |$1,062,315.00 |

Total Incremental Savings from Higher Employee Retention for all Personnel Categories for Years 2, 3, and 4 = $1,062,315.00

3. Total Incremental Costs of the Human Resource Management Department Budget for Years 2, 3, and 4.
$1,062,315.00 - $680,000 = $382,315

4. Benefit/Cost Ratio
$1,062,315.00 / $680,000 = 1.562 = 156 %

2. Question Answers
2.1 Question 1
a) The calculated benefits of reduced turnover are sufficient to justify $680,000 in increased costs associated with the expansion of the Human Resource Management department.
b) Without “reduced productivity during the learning period” there is not sufficient benefit (-$91,222.50).
|Personal Category |Savings in Year | | |...

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