Bernard Watch Company: Unraveling The Cost of Voluntary Employee Turnover 1.
Since 1963, Bernard Watch Company headquartered in Denmark had been manufacturing medium-range watches such as Dolce & Gabbana. In 1998, due to competition from manufacturers in Hong Kong, Bernard established a branch office in Hong Kong and an assembly plant in Shenzhen, China. The Hong Kong office had operational control over the Shenzhen assembly plant. In 2001, the assembly plant took over the operational control from the Hong Kong office, while the Hong Kong office continued to provide raw materials to the plant and thereby a separate human resource department was established at the plant. Since Bernard was in a skill-intensive industry with unit costs comprising primary labor rather than material or depreciation cost, Barnard believed that efficient management of human capital was a key element of its production strategy. In 2006, sales figures of Bernard grew by 25% for 5 consecutive years. Despite the strong growth, chief financial controller was concerned that the voluntary employee turnover rate among assembly line workers at Shenzhen had been as high as 39.3%. In addition, even though Bernard immediately needed to manage human capital more efficiently, Bernard’s current accounting system did not provide the useful data for making decisions regarding human capital planning. Hence, developing such a system was also necessary for Bernard. 2.
The high voluntary turnover rate could be explained by China’s booming economy. However, according to the feedback from the HR Manager, the reasons for its high voluntary turnover rate were the lack of the precise screening stage and the lack of opportunities for career development. On the other hand, according to the feedback from the Assembly Line Manager, the reasons were the inadequacy of the current accounting and information system at Bernard for providing supervisors with sufficient information to manage workers effectively. Since...
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