Suppose that it has just been projected that, because of a number of technologic

Question

Suppose that it has just been projected that, because of a number of technological innovations, your firm will need 20 percent fewer clerical employees within the next three years. There are currently 122 clerical positions in the company, split between three departments of equal size. Retirements at this level are projected to be roughly 2 percent per year. Annual voluntary turnover and involuntary turnover for Department A is 2 percent and 5 percent, respectively; Department B is 3 percent and 3 percent; and Department C is 5 percent and 0 percent. Do you project a labour shortage or surplus in the next three years for clerical positions? What actions would you take in this situation?

Explanation / Answer

Number of clerical employees required within the next three years = 122*(1-20%) = 97.6

Project number of employees after three years (adjusted voluntary and involuntary retirements) = 122*(1-2%)^3*(((1-7%)^3)/3 + ((1-6%)^3)/3 + ((1-5%)^3)/3)

= 95.4

The projected number of employees in three years will be less than the number of employees reuqired.

In this situation, I would stake appropriate steps to retain some of the employees in order to meet the projected demand and avoid the shortfall of employees.

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