Management of Return on Human Capital: An Exercise

            

Details


Case Code : CLHR046
Period : 2016 - 2017
Publication date : 2017
Subject : Human Resource Management
Teaching Note:Yes
Organization :-
Industry :Agriculture
Countries : India
Length : 2 Pages

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Abstract: ICMR India ICMR India ICMR India ICMR India RSS Feed

Mehak Kaur, HR manager ParAgra Ltd., was asked by the management to find out the reasons for the high absenteeism and attrition rates at the company. As the problem had also led to a substantial decrease in productivity, the company wanted to take some corrective measures before the problem became severe. Mehak decided to find some way to quantify the economic value added by the employees of ParAgra Ltd.so that the company could develop manpower strategies based on these analyses...

Issues:

1) Understand how to calculate the economic value added and return on investment of employees.
2) Develop manpower strategies as per these analyses.


Introduction

Mehak Kaur, HR manager of ParAgra Ltd., was trying to understand the reasons behind the high absenteeism and attrition rates at the company which had led to a substantial decrease in productivity. She realized that to find a solution she would have to figure out some way to quantify the economic value added by the employees of ParAgra Ltd. through some objective measures so that the company could develop manpower strategies based on these analyses.

ParAgra Ltd. had been doing well for the last 10 years. Its plant was spread out over 100 acres. The company had started out by leasing the land from the government for 99 years at Rs. 350/- per sq.ft., paid annually. It had become the market leader in the agricultural industry within this short span of time with revenue of Rs.880 million for the year 2016. Over the years, the company had grown from 50 full-time employees to a strength of 280 full-time employees (FTEs) and 120 part-time employees (PTEs). The part-time employees were outsourced from a leading HR outsourcing firm at an annual fee of Rs. 1 million. To provide these contingent employees with basic work amenities such as work stations, computers, internet connections, printers and scanners, transportation, and other benefits, ParAgra had to incur an additional expenditure of approximately Rs. 2 million annually ...

Key words:
Human Resource analytics; Value of human capital; Return on human capital; Economic value added; HR accounting; HR costing; HCROI; HCVA; HEVA; HCCF; Productivity; Absenteeism; Attrition

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