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ACME Manufacturing Ltd. faced an employee turnover problem. The company's annual turnover rate was nearly 20 percent among technical and white-collar workers. Among hourly paid employees, the rate was nearly 30 percent. Wage and salary surveys repeatedly showed that the company's pay levels were 10 to 11 percent above those of comparable jobs in the labour market. The benefit program was not as impressive, but management thought it was competitive. Employees received supplementary health and life insurance, paid vacations and holidays, and a Christmas bonus of $1,000. Although some employees complained about the company's benefits, complaints varied widely and no one benefit or lack of benefit seemed to be the key issue.
To make ACME's problems worse, they operated in a tight labour market, which meant jobs sometimes took weeks to fill. To hire specialized workers almost always meant recruiting them from other cities and paying their moving expenses.
(a) What additions do you think should be made to the company's benefit program? (Hint: what is missing?)
(b) What are cafeteria-style benefits? What problems in the incident might be solved by a cafeteria approach? Think of specific interest groups.
(c) To overcome the company's recruitment problems, what other changes do you suggest? What are the trends in benefit programs?
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