It was formed 15 years ago and has had stable growth till the last three years when it started incurring high costs. The company feels that issues like unexpected temperature drops, outbreak of pests and rising labor costs has lead to the increase in costs in recent years. 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. The most basic problem arises when senior managers feel their productivity is reaching a stage of stagnation. This could be possible if they feel their job is not challenging enough, or perhaps if they consider it monotonous and boring. For this purpose it will also be important to talk to as many people as possible to gauge the nature and extent of the issues involved. Several in depth interviews need to be conducted in order to find the main cause of dissatisfaction at work
To get a better hold of the issue we also need to survey and analyze existing financial documents of JRT. This would include