Question

1. Queen City Treating is a metal treating company that hardens prefabricated metal products for automobile accessories, including seat belt buckles, wheel rims, radiator caps, and other items. The company is experiencing some serious cost problems. Foreign competition, which uses better technology and has different cost structures, is taking away some of Queen City’s customers by offering lower prices. As a result, Queen City is scrutinizing all of its costs. The CFO has concluded that one area that needs revamping is the high labor cost of the senior workers. The company is considering a voluntary buyout of these workers, in which they would be offered a financial incentive to leave the company before their normal retirement age. Company statistics indicate that 30 percent of the workforce has over 25 years of service and is earning the top rate of pay. The total wage difference among the highest and lowest paid production workers is about $8 per hour, and the company utilizes about two million labor production hours per year. Management believes that replacing these more senior and higher paid workers with persons at lower rates of pay would significantly improve the costs and productivity of the business.

If more senior employees leave the company, could there be a reduction in productivity? How would you calculate productivity? If there is a reduction, how long would it persist? What steps might be taken to mitigate this problem?

Answer 1

If more senior employees leave the company, could there be a reduction in productivity? How would you calculate productivity? If there is a reduction, how long would it persist? What steps might be taken to mitigate this problem?

yes there will be a reduction in productvity by removing the senior employee in the larg amount but It can be manage by making some best senior worker as a temporary contractual employee with incentive who will supervse the new worker and provide with them the best skill they know to the new workers .In that way in a period of time , the new worker will be efficient to increae the overall productivity of the company .Also the reduction will persist for short term as the company might use the moeny saved from the wages of senior worker to the technological and sales aspect of company like in r and d to make the production more efficient and improve the sale and increae its competitiveness in the market .

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