7.1.9 Human Resource Definitions

Needed Complement The number of workers needed this year if you are to avoid Overtime.

Complement The number of workers in your workforce this year. This year's workforce Complement is entered on the Production area and appears in the second row of the Human Resource area. You can run up to to two full shifts.

As you add workers, the 1st Shift is completely filled, then the 2nd Shift begins to fill. Suppose that you do not have enough workers? The 1st Shift must then work Overtime to complete the work schedule. Excessive Overtime drags down Productivity and increases Turnover. 2nd Shift and Overtime workers cost 50% more per hour than workers on 1st Shift.

1st Shift Complement As you increase the workforce, the simulation completely fills the needed 1st Shift Complement before adding 2nd Shift workers.

2nd Shift Complement The number of workers on 2nd Shift. 2nd Shift workers are paid 50% more per hour than 1st Shift workers. 2nd Shift scheduling does not increase the Productivity Index.

Overtime % The percentage of 1st Shift workers on Overtime. 100% means that every 1st Shift worker is working a double Shift. 15% means that, on average, each 1st Shift worker performs 15% Overtime. Overtime increases Turnover and drags down Productivity.

Turnover Rate The percentage of workers who left the company last year, excluding down-sizing. About 5% is rooted in unavoidable factors like retirement, relocation and weeding out poor workers. Remaining Turnover is a function of employee dissatisfaction. The best workers leave first. Turnover is driven down by Recruiting Spend and Training Days (the green input cells in the Human Resources area). Turnover also goes up as a result of Overtime and a substandard compensation package from the Labor Negotiation. The Turnover Rate ignores down-sizing factors. It reflects the Turnover in the population of workers that you keep after down-sizing (that is, after the sale of production Capacity).

New Employees Employees recruited this year. At a minimum, New Employees reflects replacements for workers lost during the course of the year to Turnover. It also includes workers hired in January to increase the Complement from last year. New employees incur a Recruiting Cost. As a simplifying assumption, the simulation does not rehire fired or separated workers.

Separated Employees Employees lost because of down-sizing or increases in Automation. Specifically, Separated Employees is Last Year's Complement minus This Year's Complement. All separations occur in January and incur a Separation Cost.

Recruiting Spend Recruiting Spend is the extra amount budgeted per worker to recruit high caliber workers. The higher the budget, the better the worker, resulting in a higher Productivity Index and lower Turnover. Your entry is added to the base amount of $1,000 per new employee. $0 means no extraordinary effort is spent recruiting new people. Diminishing returns apply after $5,000 per worker. It may take several years to see a significant impact, but the effect is cumulative. Minimum Turnover is 5%. If you replace 5% of the workforce each round with high caliber people, after 8 years you would replace a significant percentage of your workforce with high caliber workers.

Training Hours Training Hours is the number of hours each year that each individual worker is taken off-line for training and development. Training produces a higher Productivity Index and lower Turnover Rate. The more time off-line, the higher the needed Complement. Each training hour costs $20 per worker in additional training costs. For example, 40 means that each worker will spend 40 hours in training this year.

Productivity Index The Productivity Index indicates how the general workforce compares with the workers employed in Round 0. 100% means that current workers are just as good as original workers. 110% means that, on average, you only need 91% (100% / 110% = 91%) of the workforce Complement to do the same work as a workforce comprised of original workers. In short, higher productivity means fewer workers are required to do the work, and that drives down per unit labor cost. Recruiting Spend and Training Days drive up the Productivity Index. Overtime and Turnover drag down the Production Index. This Year actually means by the end of this year. Last year's productivity is the driver behind your complement requirements this year because it indicates your productivity level on January 1.

Recruiting Cost The amount spent to recruit new workers. Equals the number of workers recruited times ($1000 + Recruiting Spend).

Separation Cost The cost to separate (layoff) workers. If you down-size your workforce (by selling Capacity or increasing Automation), each worker is given a separation package worth $5000.

Training Cost Training costs are driven by Training Hours. Each worker-training hour costs $20 and pay for such things as educational materials, instructors, etc. Training costs do not include time off the job.

Total HR Admin Costs Total HR Admin Costs are incorporated into the Income Statements Admin line item. Costs are allocated to products based upon their Complement. For example, if Able has 10 workers and Acre has 20, then the HR Admin costs (training, recruiting, etc.) would be twice as much for Acre as for Able.