Breaking the Cycle of Employee Dissatisfaction

Hyejun Johanna KimValerie OwoloMargo SteinJason Vitorillo Ding Wang

Company Overview

Large Chinese electronics company that makes electronic products for companies such as Apple, Dell, Sony, and HP

900,000 employees worldwide

112 on the Fortune Global 500 list for 2009

Net Income of $2.3 Billion (2009)

Presenting Issue

12 factory employees have committed suicide and 4 attempted to commit suicide off a main Foxconn building in China

  Have strung nets to try to catch any

additional jumpers as well as blocking windows and locking doors to roofs and balconies

Timeline

June (1), Septem-ber (1)

2007:

2

March (1)

2008:1

July (1),August (1)

2009:2

2010:12

January (1)

March (3)

April (3)

May (5)

Suicides per Month at Foxconn

Life at Foxconn

Facilities with swimming pools, libraries, gyms and computers, but no time to enjoy these amenities

Each employee signs a 'voluntary overtime affidavit,' in order to waive the 36-hour legal limit on monthly overtime hours

Foxconn has long come under fire from labor activists, who say the factory is little more than an electronics sweatshop

Consequences

Inhumane atmosphere Bad media coverage Potential for Apple,Dell, HP, Sony,

etc. to move their business to competitors if conditions do not change

High turnover

Diagnosis

The core of the problem is employee job dissatisfaction

Poor work conditions, workflow problems, and inadequate pay and benefits all contribute to worker stress

Work conditions look nice from an outsider’s perspective

Reality is not as nice

Recommendations

Simplify pay structure, make quotas realistic

Create work teams centered around one product line to reduce psychological isolation

Make counseling more accessible

Implement a rewards sys-tem, change discipline structure

Cost – Benefit Analysis

Average of 198,000 employees (factory workers per site). It is assumed that 15% of employees will attend the training program annually.

= 29,700 employees per year= 14,850 employees per 6 months

Turnover rate 35% per 6 months. But it is assumed that turnover rate will decrease by 10% due to training.

= 1,485 employees retained

Cost of single employee turnover = US $3,348

Benefits from training (dollar value) of retained employees = US $4,971,780

Cost of training per participant = US $218

Total cost of training (for every 14,850 employees) = US $3,237,300

Benefits – Cost of Training = US $1,734,480

ROI = 1.54 = 154%

Cost – Benefit Analysis

Average of 2,000 supervisors per site. It is assumed that 20% of supervisors will attend the training program annually.

= 400 supervisors per year

Turnover rate 35% per 6 months. But it is assumed that turnover rate will decrease by 10% due to training. = 40 supervisors retained

Cost of single employee turnover = US $6,140

Benefits from training (dollar value) of retained employees = US $245,600

Cost of training per participant = US $436

Total cost of training (for every 400 supervisors) = US $174,400

Benefits – Cost of Training = US $71,200

ROI = 1.41 = 141%

Questions?