Plastec Turnover

Plastec has a real problem with turnover. John and Roy have noticed they have had a lot of people quitting. This is bad, because according to Paul “The average cost of turnover in the U.S. is three times the annual salary of each position; therefore, skilled testing and interviewing in order to select the best candidates and thus increase the likelihood that they will stay on the job longer, can have a significant impact on an organization’s profitability. “ In addition, Plastec’s production has falling. According to the exit interviews “Some of the people said they were quitting because they could make more money someplace else.” In addition, others are stating that they can receive better benefits somewhere else. All these issues lead to the decision to come up with a new plan. Paul, the new human resources manager has been charged with coming up with a new strategic compensation plan. His first order of business would be to do a job analysis by looking at job descriptions and job specifications, which he previously updated because they were out of date. He could then do a market analysis, to see what other companies are paying. According to the Bureau of Labor Statistics (BLS), the mean hourly wage for a machine operator is $16.01 per hour with a mean annual wage of $37,780 per year. (http://www.bls.gov/oes/current/oes514023.htm#ind) While this gives us the national average, it doesn’t say how much we should pay our employees. By looking at the productivity of similar industries, again at the BLS, we could see how Plastecs productivity compares to industry average. This article can be found at http://www.bls.gov/news.release/prin.t01.htm . Based on this information, we can compare Plastec’s productivity to the industry average. This could be used to further develop an incentive program if target productivity is reached. As far as choosing a benefits package, they best options would seem to be a cafeteria plan. As the company works