SECTION 1: THE HRMANAGEMENT CASE
and hiring of new
and appraisal of
current employees; and
You are to assume the newly-created position of Human Resource Director for a medium sized firm with over 600 employees. The firm has experienced significant expansion in the past few years; the human resource department and its functions have not kept pace with company growth. The Chief Executive Officer (CEO) has instructed you to get the human resource department organized and build a strong HR function. You have wide latitude in this area and the CEO has encouraged you to "get this organization moving." You will want to set some ambitious, yet realistic, quantifiable goals for the Human Resource department.
Although the industry is slowly becoming unionized, currently this has no impact on your firm. At the lower job level, your workforce has both skilled and semi-skilled workers (about 500). The firm has no policy on promotions and has hired into the upper levels of management from the outside as well as promoted from within. Employee training is currently the responsibility of each department head and consists solely of onthe-job learning; no formal instruction is provided. Economic conditions in your region are good and unemployment rates are average.
Human Resources Department Budget
You will be notified of your annual budget at the start of the simulation. Each succeeding quarter your remaining annual budget will be displayed in the Budget Report. Your yearly budget will need to cover expenses for hiring, wages, benefits, training, and new HR programs. When you add a benefit to the employee compensation package or increase wages, your budget will be charged for the additional benefit expense or wage increase for that first quarter and that quarter only; in subsequent quarters, the firm will absorb these expenses.
Carefully analyze your budget to ensure that you do not overspend. You might have to drop critical programs in the last quarter of the year if you do not have enough funds in the budget. Dropping programs will have a negative effect on employee morale, which could result in increased turnover and decreased production.
Quarterly decisions must be made within these budgetary constraints: •
Any surplus or deficit will be carried over to the next quarter. Any surplus will not be carried forward to the next year.
HRManagement Case—Page 9
It is important, therefore, not to exceed your budget in the 4th, 8th, and 12th quarters. This is standard business procedure. Exceeding the budget at the end of the year (every 4th quarter) is a serious managerial deficiency and will have negative consequences.
NOTE: For Year 1,
your budget is
$1,400,000. Twentyfive percent ($350,000)
should be your target
budget for the first
Your budget is limited and cannot immediately meet all your
departmental needs. You must make a budgeting plan that implements your departmental objectives for the year, and use it to guide your decisions each quarter. You may find that your plan will need adjustment as the simulation progresses.
The budget for Year 1 and the estimated budget for Year 2 are shown below. As in the "real world," budgets are not guaranteed and the financial officer may need to modify your budget if conditions change. If so, you will be notified via the simulation Newsletter.
Year & Qtr. Numbers
Year 1: Qtrs. 1–4
Year 2: Qtrs. 5–8
Year 3: Qtrs. 9–12
To be announced
Avg. Qtr. Budget
It is important for you to provide enough employees at all job levels to meet production...
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