Juicy Red Tomato Company (JRT) is facing problems of rising costs. The company has identified some external factors such as weather conditions but we need to dwell into the issue and look at what internal factors may be leading to high labor costs. The problem of high employee turnover has been singled out and its possible reasons could be the company policy of 'promoting from within-the longer you stay with the company the more you can rise.' This proposal is aimed at looking at the problem and its possible reasons in a step by step fashion.
Moreover, the company intends to expand its facilities and so it must address this major issue of employee turnover.
In the recent past employee turnover has increased and key personnel are leaving. This is having a broad effect on internal costs. The acts of hiring new employees, training them, enabling them to grow as professionals all incur huge costs. This is evident by the statistics presented which indicate that company growth is stable at 5% but costs have been rising at an average of 2.5-4% in the past 3 years. If this trend continues then ultimately JRT will head towards major financial losses. Such losses can be very heavy for a consumer product company which needs to invest substantially in marketing and advertising. However, losses would mean slashing advertising budgets. Moreover, JRT's reputation in the industry will be effected which will lower the moral of the existing employees and in turn reduce their productivity.
Key personnel turnover can occur if managers feel dissatisfied and do not see opportunities to grow. ...