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Abstract

Since 1963, Bernard Watch Company has been manufacturing watches for widely known brands, such as Dolce & Gabbana and Roamer. The company is headquartered in Denmark and has a branch office in Hong Kong and an assembly plant in Shenzhen, China. Anson Leung, Chief Financial Officer, has conducted a series of audits on the various cost aspects of running the assembly plant. This is to ensure efficient management of the plant''s human capital, which is a vital resource for the company due to the need for stable production quality with just-in-time delivery at competitive prices - a common goal for the watchmaking industry. Leung is alarmed by findings that reveal a high voluntary turnover rate of 39.3% among assembly line workers during 2006, costing Bernard as much as RMB718,188.9. She is concerned that this may jeopardise the company''s long-standing market position in watchmaking. This case examines the different types of costs that may incur from voluntary turnover, including both direct and intangible costs such as those that are related to separation of leaving employees, recruitment of new staff and loss in productivity. It can be used to teach the concept of human resources accounting and to introduce how human resources management practices may help reduce voluntary turnover costs.
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Abstract

Since 1963, Bernard Watch Company has been manufacturing watches for widely known brands, such as Dolce & Gabbana and Roamer. The company is headquartered in Denmark and has a branch office in Hong Kong and an assembly plant in Shenzhen, China. Anson Leung, Chief Financial Officer, has conducted a series of audits on the various cost aspects of running the assembly plant. This is to ensure efficient management of the plant''s human capital, which is a vital resource for the company due to the need for stable production quality with just-in-time delivery at competitive prices - a common goal for the watchmaking industry. Leung is alarmed by findings that reveal a high voluntary turnover rate of 39.3% among assembly line workers during 2006, costing Bernard as much as RMB718,188.9. She is concerned that this may jeopardise the company''s long-standing market position in watchmaking. This case examines the different types of costs that may incur from voluntary turnover, including both direct and intangible costs such as those that are related to separation of leaving employees, recruitment of new staff and loss in productivity. It can be used to teach the concept of human resources accounting and to introduce how human resources management practices may help reduce voluntary turnover costs.

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