The Calleeta Corporation May 15, 2011 HRM 520 Identify three key business issues facing Jan, Calletta’s CEO. As Calletta’s CEO, Jan is facing a number of problems such as: lack of support from board members/investors, increasing employee costs, and protests against Calletta’s offshore facilities due to the growing concern of working conditions. Jan key issue on hand is the lack of support from board members and investors. Board Members and investors right now are not supporting Jan or her proposal due to a poor return on investments.
Board Members are concerned about the rapid increase of employee cost the company is incurring. Calletta is incurring a 12% cost increase annually compared to an industry average rate of just 4% in the U. S. It seems that until Jan is able to reduce employee cost along with increasing the company’s revenue and return on investments she will continue to lack the support needed for her future plans for Calleeta. Another key business issue Jan is facing at Calletta is the rapid increase in employee cost.
Board Members are furious that Calletta is paying a well higher annual rate of 12% versus the industry average 4% that their competitors are paying. Board Members are demanding that Jan seek ways to decrease employee cost before approving any future plans. As a result Jan is forced to choose between HR Vice-President John Nosmas practices or the board who affects her maneuvering power for future plans. John Nosmas defends his practice of paying higher wages along with providing expensive benefit programs because he believe in hiring the best employees and believes that his practice also keep employees along with products innovated.
This key business issue kind of puts Jan in a hard place because both parties play a vital role in her success as CEO. Finally, as CEO Jan is faced with the growing concerns over working conditions in their foreign facilities which are being targeted by activists on behalf of humane working conditions. This issue not only affects Calletta from a publicity stand point but from a production standpoint also. If this concern is not contained Calleta can be labeled as an inhumane place to work and may lose investors resulting in a loss of business and profit.
Another concern this issue presents is eventually it could affect production due to the protesting by activists. If activists intervene in the daily operation of Calleta such as blocking supplies from coming in, it could affect production and in return revenue causing an uproar with investors in which Calleta don’t need. Therefore, it is critical that Jan resolves this issue before it before it becomes detrimental to the organization. Discuss the ways that Calleta’s HR operations are contributing to the company’s success.
Calleta’s HR department is the backbone of the company’s success. Due to HR Vice-President John Nosmas and Jan’s human capital talent acquisition and retention plan Calleta was able obtained the most highly skilled individuals in their industry giving the organization a competitive advantage. John and Jan’s plan focused on matching the company’s core competences to recruits that possess the skills within Calleta’s strategy. John and Jan believed that their strong recruiting and retaining plan would give the organization a competitive edge along with innovating the company’s products.
Without a strong recruiting and retention plan a company will constantly incur a high turnover rate along with inconsistency with the quality of their products. “A company that implements an effective recruitment process is likely to gain competitive advantage in the marketplace, improve returns, and achieve economies of scale. This is possible only through the recruitment of quality candidates in to the organizational workforce (Sangeetha, K, 2010)”. Therefore, Calleta’s HR operations are key to the company’s success because it thrive to find the right people to fuel the company’s products.
Identify three changes that can be made at Calleta to meet the Board of Directors demands. After reading the case study it seems that the Board of Directors main demands and concerns are with the rapid increase in employee cost. Therefore to meet the Board of Directors demands Calleta would have to focus on cutting employee costs in the area of employee benefits. The first area Calleta can cut cost is in employee’s personal benefits. Calleta can cut employee cost by only paying a percentage of employee’s healthcare, dental, and life insurance versus providing these benefits at no cost to the mployee. This approach along should reduce Calleta’s cost tremendously considering the increasing cost of healthcare. This method would not hurt Calleta recruiting shceme because it’s a method most U. S. companies are adopting. According the Los Angeles Times, “in 2010 nearly a third of employers reported that they either reduced the scope of benefits they are offering this year or increased the amount that workers must pay out of pocket for their medical care”. This approach will share the liability of cost with employees instead of Calleta taking on the full incurred cost.
By sharing the cost for healthcare and insurance benefits Calleta will be able to cut employee cost drastically. Another change that Calleta can make to meet the Board of Directors demand is reducing the 401k match from 10% to 5%. Calleta currently offers a very generous 401k plan that exceeds most competitors’ plans within the industry. With the current 401k plan Calleta is losing a massive amount of money in matching employee’s contributions. Calleta is basically giving money away on top of all the other great benefits they offer.
Even with reducing Calleta’s contribution amount this still leaves Calleata in a competitive position in terms of recruiting due to their other generous benefits. By reducing their 401K plan matching scheme from 10% to 5% this will reduce the amount of money Calleta was previously spending on 401K matching by half making the Board of Directors incredibly happy. Another change Calleta can make to meet the Board of Directors demands is by reducing some of their paid programs such as pet boarding.
If Calleta eliminates this program as a whole they can save on paid wages, benefits, and vacation earned by employees. Programs such as pet boarding are offered outside the workplace and are considered luxury services. This type of service should not be at the cost of Calleta unless they have the revenue to support it. However, in Calleta’s case they do not have revenue to support this luxury service to employees. By eliminating this program is it helps provides some relief to the drastic increase in employee cost.
Discuss how a balanced scorecard can help the CEO explain the value of her HR talent management approach. A balanced scorecard can help the CEO explain the value of her HR talent management approach by measuring the visions and goals of her approach against the various categories of the balanced scorecard to show how they performed. For instance, since Jan’s talent management approach focuses on innovation she could measure the performance of her approach against the learning and growth component to show how her approach faired against the metrics in place.
In the learning and growth component metrics are generally setup to guide managers in ensuring employees receive training/mentoring to promote employee development and growth. Jan can use the results of a balanced scorecard to persuade Board Members into embracing her approach. Jan can use a balanced scorecard to show how the additional training given to employees has increased motivation and productivity to reduce product time-to-market.
By illustrating how her talent management approach has increased production and morale Jan is able to defend her approach and show the value of her approach to Board Members. As a result of being able to demonstrate how her approach has benefited the company Board Members will more than likely embrace Jan’s approach because of the positive results. Identify three sample measurements in each of the four balanced scorecard categories that would support the CEO’s presentation to the Board of Directors.
Three sample measurements in the learning and growth category that would support the CEO’s presentation to the Board of Directors would be: competency development expense per employee (cost control), number of employees with development plans (cost control), and number of special projects for employee development (value creation). Three sample measurements in the financial category that would support the CEO’s presentation to the Board of Directors would be: HR recruitment expense/ R&D hires (cost control), HR training expense/ $ of sales revenue (value creation), and HR departmental expense/$ of sales revenue (cost control).
Finally, for the customer category three sample measurements in the learning and growth category that would support the CEO’s presentation to the Board of Directors would be: number of delivers on-time, numbers of customers satisfied, and rating of quality of service. References Sangeetha, K. K. (2010). Effective Recruitment: Strategy, 7 (1/2), 93-107. Retrieve from EBSCC on May 9, 2011. Leavy, N. N. (2010). U. S. employers push increase in cost of healthcare onto workers. Retrieved from http://articles. latimes. com/2010/sep/02/business/la-fi-healthcare-costs-20100903