Talent Management Rasi Firm Report
- Executive Summary
This report has risen due to a growing concern by the new General manager about Rasi Co’s lack of a coherent HR system and how it could cost the company. In recent times businesses are evaluating their HR systems to ensure that they meet the needs of the existing business environment. Absenteeism and employee turnover are key issues affecting many companies in Australia.
The main objectives of this report include: To document the nature and extent of employee turnover within Rasi Co; To document the cost of absenteeism within Rasi Co; To document the cost of involuntary turnover rate within Rasi Co; To document the cost of voluntary turnover rate within Rasi Co. The approach involves analyzing the data given by the ne general manager.
The finding comes from the analysis and calculation conducted in section 3. Lastly, the recommendations cover issues such as improving the working environment, professional development and introducing absenteeism policies.
This report has risen due to a growing concern by the new General manager about Rasi Co’s lack of a coherent HR system and how it could cost the company. In recent times businesses are evaluating their HR systems to ensure that they meet the needs of the existing business environment. Absenteeism and employee turnover are vital issues affecting many companies in Australia. According to the East Coast Human Resource Group (n.d.), absenteeism costs Australian business owners about $ 33 billion annually. Employee turnover rate also has negative implications for businesses. This report will explore how absenteeism, employee turnover rate, involuntary turnover rate, and voluntary turnover rate are likely to affect the performance of Rasi Co. and suggest recommendations that should be implemented to address the issues. According to statistics, about 1.3 million Australians changed their jobs in February 2022 (Australian Bureau of Statistics, 2022). Tasmania is among the top six Territories with the highest number of employees who changes their jobs in 2022 (Australian Bureau of Statistics, 2022). The Figure below shows job mobility in different territories in Australia
Figure 1: Job mobility in different territories in Australia
- Project aims and objectives
This project has the following aims and objectives:
- To document the nature and extent of employee turnover within Rasi Co.
- To establish the cost of absenteeism within Rasi Co.
- To establish the cost of involuntary turnover rate within Rasi Co.
- To show the cost of voluntary turnover rate within Rasi Co.
The calculation will be based on the information provided by Amy, who is the new General Manager at Rasi Co.
- Turnover rate
The turnover rate refers to the measurement of employees who leave an organization voluntarily or involuntarily during a specific time. In our case, it measures employees who live at Rasi Co. within one year. The Turnover rate is calculated by considering the number of separations during a specified time, dividing it by the average number of employees, multiplied by 100. Turnover Rate = # of Separations / Avg. # of Employees x 100.
Table 1: The turnover rate at Rasi Co. between 2015 and 2021
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- Cost of Absenteeism
Absenteeism is considered one of the factors in the overall performance of businesses in Australia and across the globe. It is the responsibility of HR professionals to develop absenteeism policies that would help reduce the number of absenteeism cases in organizations. Rasi Co requires a full-fledged HR department to develop absenteeism policies within the organization. There are different causes that could result in absenteeism in the workplace. According to Folger (2021), some of the common causes of absenteeism in the workplace include; bullying and harassment, low morale and stress, childcare and eldercare, depression, and disengagement. Illness, injuries, job hunting and partial shifts. From the given data, it is possible to calculate the rate and cost of absenteeism.
The rate of absenteeism= Average number of employees multiplied by missed work days, divided by the Average number of employees multiplied by the total workdays.
For Risa Co., the absenteeism rate in 2021 is (44*62)/ (44*251) = 0.25. So, the absenteeism rate at Risa Co. for the three departments in a year is 25%.
The cost of absenteeism is calculated as ACE = (ML (WH + EBC) + S (RH + SBC) + OC) / E. For Risa Co. The cost of absenteeism is (465(54.3+10.86) +28830(112.7+22.54) +1783.3/44= 655057.7. So, the total cost of absenteeism per employee per year for Risa Co. is $655057.7
- Cost of voluntary turnover rate
Voluntary turnover refers to the scenario whereby an employee part way with the company voluntarily, mainly through resignation. The resignation may be due to a search for greener pastures, better working conditions, or even medical reasons. The cost of voluntary turnover is calculated by taking the vacant position coverage costs and adding the cost to fill the vacant position plus the cost of productivity divided by the number of employees in a given year. For Risa Co., the cost of voluntary turnover rate in 2021 was (64.3+ 430.81+ 1733.3 + 50)/44= 51.8. So, the cost of voluntary turnover at Risa Co. is $51.8 per hour.
- Time to fill cost
Time to fill cost refers to the amount of money the company incurs until the vacant position is filled. For Risa Co., it will be 1733. 3 + 2602.95 = $4336.25
- Core Findings
Based on the analysis and calculations in the previous section, several findings were discovered with the current HR system at Risa Co. The average turnover rate at the company since when it was started up to date is 12.4%. The turnover rate at Risa Co. is higher than the Australian national average, which was indicated at 9.5% in 2022 (Australian Bureau of Statistics, 2022). The results show that the company has not put in place a good working environment, including compensation that would make the employees want to work for the company for more extended periods. The following factors could have contributed to a higher employee turnover at Risa Co.
- Lack of flexibility
Flexibility is critical in promoting dynamism in the workplace. Since its inception, the company has not made efforts to create other departments, such as the HR department; hence the workplace lacked flexibility.
- Poor remuneration and benefits
Through the company pay its employees slightly above the average pay in the finance industry, the high staff turnover rate could result from poor additional benefits such as health insurance, annual leave days, and paid leave day, among others. One of the critical factors that Australian job seekers consider in a potential employee is work-life balance. Work-life balance has a direct correlation with employee job satisfaction and performance (Krishnan, Loon and Tan, 2018)
- Poor learning and development opportunities
Learning and development opportunities form one of the most fundamental factors that could help attract and retain employees. Based on the information given by Risa Co.’s general manager, the company only provides training for new hires; as such older and experienced employees are likely to leave the company and look for other companies that offer additional training and development to enhance their careers. Learning and professional development opportunities help increase the value an employee considers a particular organization; the higher the value, the lower the chances of looking for employment in other companies (Desimone, 2011).
Absenteeism is also another major factor that was found during the analysis above; it causes the company to incur additional costs without being productive. According to the above analysis, the yearly absenteeism rate at Risa Co. is 25% which is way above the Australian national average of about 4% (Direct Health Solutions, n.d.). The high absenteeism has caused the company to incur severe financial losses that could be managed by having a proper HR depart that could initiate absenteeism policies. Some factors that have contributed to the unsuccessful management of absenteeism are poor monitoring systems and a lack of data. Lack of analytics and lower management engagement (Kocakulah, Kelley, Mitchell, and Ruggieri, 2016)
- Summary and Recommendations
The following are some of the recommendations that Risa Co. could implement to help reduce the employee turnover rate, the absenteeism rate and the associated costs.
- Improve the job design and working environment
The introduction of an HR department will make it possible to create policies that ensure a conducive work environment for all employees. The company should provide modern amenities that would help reduce monotonous work that imping the overall quality o the working environment.
- Improve collection and analysis of turnover data
Consistent collection of turnover data would help the company evaluate the issues that cause a such turnover, thus addressing the core issues which will result in a lower rate of employee turnover. The data would help address issues such as additional benefits such as healthcare and work-life balance.
- Implementation of absenteeism policies
The new HR department would be able to create policies that are geared towards addressing absenteeism, thus, reducing the causes that the company incurs as a result.
- Introduction of training and professional development policies
The policies would allow the employees to attach value to the organization and their job. Thus, they would be willing to stay longer to acquire additional training and develop their careers.
Desimone, L.M., 2011. A primer on effective professional development. Phi Delta Kappan, 92(6), pp.68-71.
Direct Health Solutions (n.d.). Managing Absenteeism in Australia. https://cdn2.hubspot.net/hubfs/6967054/2020/Direct-Health-Solutions-Managing-Absenteeism-In-Australia-A-practical-guide.pdf.
East Coast Human Resource Group (n.d.). $33bn – the cost of absenteeism. https://www.eastcoasthr.com.au/1602/.
Folger, J. (2021). The Causes and Costs of Absenteeism. Investopedia. https://www.investopedia.com/articles/personal-finance/070513/causes-and-costs-absenteeism.as.
Kocakulah, M.C., Kelley, A.G., Mitchell, K.M. and Ruggieri, M.P., 2016. Absenteeism problems and costs: causes, effects and cures. International Business & Economics Research Journal (IBER), 15(3), pp.89-96.
Krishnan, R., Loon, K.W. and Tan, N.Z., 2018. The effects of job satisfaction and work-life balance on employee task performance. International Journal of Academic Research in Business and Social Sciences, 8(3), pp.652-662.