Planning for the Future at East Coast Bank Paula Mason is one of three new assis
ID: 387944 • Letter: P
Question
Planning for the Future at East Coast Bank
Paula Mason is one of three new assistant regional managers of East Coast Bank (ECB). Her position was recently created to provide administrative support and advice for the regional manager in charge of the southwest region, Ian Swartz. In their first meeting as a team, Paula and the two other assistant regional managers met with Ian to discuss areas throughout their branches that might be addressed to lower costs and raise profitability. Each of the assistant managers was given different aspects to emphasize, and Paula was asked to focus on ways to reduce labor costs and/or increase labor productivity among employees throughout the eight branches. In part, this was a response to feedback from the branches regarding an increase in recruitment and training expenses, as well as a decrease in employee morale.
Paula's first course of action was to evaluate some direct and indirect labor costs related to turnover and retention, as well as areas of bloated labor (labor surpluses) through the southwest region. Based on her analysis, Paula arrived at the some basic points of information for the branches. First, ECB is organized into several broad regions throughout New Jersey, Pennsylvania, and Delaware. Each region comprises 8 to 12 bank branches. Each branch consists of 4 primary positions: branch managers, assistant managers, loan officers, and tellers/customer service agents. On average, each bank has 1 branch manager, 3 assistant managers, 4 loan officers, and 15 tellers/customer service agents.
Beyond the average staffing levels, Paula was also able to get some information regarding the movement of employees throughout and out of the organization. As shown in the following transition matrix, ECB averages 26% turnover, with turnover among the tellers/customer service agents slightly higher, at 33% and turnover at the assistant manager level the lowest, at 17%.
Questions
1-Based on the transition matrix for ECB, which positions are experiencing a labor surplus or a labor shortage?
2-What tactics would you use to address the labor shortages? Why?
3-What tactics would you use to address the labor surpluses? Why?
4-When you look at the overall pattern of employee movement, do you see any areas that are of particular concern?
5-What plan would you recommend for the future to prevent ECB from having excess surpluses and shortages?
Explanation / Answer
Based on the transition matrix for ECB it appears that there is a labor surplus of assistant managers. There is a labor shortage with loan officers and tellers. I believe the area that needs the most attention is the tellers. The tellers are currently operating at %53. I imagine that they have the highest turnover rate because of job, salary, and because of the high turnover rate itself.
I would hire new personnel to fill the needed positions. I could reward the employees staying with the organization with a pay raise. I could offer overtime until positions are filled. I can also transfer some of the personnel to balance out the shortages.
For the labor surplus of assistant managers I would promote two of them to fill the shortage the organization will have for managers next year. With the remaining assistant managers I would offer a position demotion to loan officer but would like for them to maintain their salary until positions open up in 2017 and transfer them back. I believe it is important to retain motivated and experienced employees. Finally if one of these assistant managers is under performing I will use this opportunity to lay him/her off.
There is a labor shortage with loan officers and tellers. I believe the area that needs the most attention is the tellers. The tellers are currently operating at %53. I imagine that they have the highest turnover rate because of job, salary, and because of the high turnover rate itself.
Maintaining an accurate projection of transitions in the work force plan will assist in mitigating labor shortages. I would recommend looking at why the turnover rate is so high with tellers and attempt to lower the number through training, incentives. I don’t feel as if a low number of surplus will negatively affect an organization especially when very technical skills are required. It might even be prudent to have a few extra people qualified to fill unforeseen shortages. The excessive surplus should have never occurred and is a management issue.