Analyzing Employee Performance Data for Cost Reduction Strategies

1 Module Two Assignment Southern New Hampshire University BUS 225: Critical Business Skills for Success January 20, 2024

2 Module Two Assignment Interpretation As the HR manager of our firm, I am responsible for reviewing, analyzing, and interpreting the data on employee performance within the last year. To do this I will use qualitative and quantitative data to in turn help abate our company budget by ten percent. According to Soomo Learning (2020), quantitative data is data "that can be represented by numerical values", while qualitative data represents "qualities that are observed". Through the performance data report, I have reviewed data that includes: employee ID, date of hire, department, performance scores, managerial comments, bonuses, salary, and overtime. The most evident piece of information I have gathered is all many of our employees have been with the company for over 20 years. Using functions in Excel, the average performance score company-wide is 3. The highest performing department is IT and Logistics with a 3.25 average, while the lowest is Finance and Accounts with a 2.50 average. Account Planning and HR and Facilities have a 2.75 average, Account Services has a 2.64 average, Manufacturing has a 2.95 average, Sales has a 2.88 average, and Management, Web Development, and Research all share an average of 3. After reviewing the data, there are a few points that I would like to address. To start, I would like more insight into the employees who have received overtime pay. Overtime can be rather unpredictable, but this is also an area in which we can reduce costs. Gaining more insight into this will allow me to determine if workloads need to be readjusted, or if overtime is necessary. Secondly, I would like more insight into managerial comments and employee salaries. There are a few employees that have comments of "essential employee", but no explanation as to

3 why. Furthermore, these "essential employees" have a lower or higher salary than others who may have performed better than them. Analysis We are currently spending $5,198,091 in salaries, bonuses, and overtime alone. $5,014,191 belongs to salaries, $146,000 belongs to bonuses, and the remaining $37,900 belongs to overtime pay. Upon review of bonuses, it is evident that all employees aside from managers received a bonus of $2,000. With this being said, although managers have not received a bonus, our company spends the most money on management salaries compared to other positions. There are a few instances in employee salaries that I would like to examine where an employee is marked as essential, yet their pay is significantly less than another employee who has been here for a shorter period of time. In terms of developing a strategy to reduce expenses, I would like additional data on how employee salaries are configured, and the circumstances causing employees to work overtime. Out of all 77 employees, there are three employees (one in manufacturing, one in account services, and one in HR & facilities) with a performance score of 1. This is something that I would like to further examine so we can find any underlying causes for low performance. Sources that will help the company reach a decision are comparing previous performance data to the current data, employee surveys, previous salary increases, information related to job requirements (to determine why certain employees are getting overtime), and in-depth one-on- ones with employees. Conclusion

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4 To help with our company budget by ten percent, we need to eliminate $519,809. I believe that the most efficient way to do this is through employee salaries, bonuses, and overtime pay. There are multiple ways that this can be accomplished, but I recommend that we start with lowering the salaries of the highest-paid employees who have lower performance scores or terminating the employment of a few employees. From here, we can reassess the eligibility of the bonus and the bonus structure. I believe that higher employee bonuses should be based on performance; in other words, higher performance equals a higher bonus. Lastly, to reduce overtime expenses, it would be beneficial for our company to employ a cap on overtime, delegate tasks, or even cross-train interested employees. If we choose to terminate employees, my recommendation for the potential employees who should be terminated is as follows: 1. Employee 328530 in HR & Facilities has a performance score of 1, with a salary of $61,000 and a $2,000 bonus. Having high performance in this department is crucial for our organizational success and setting an example for employees to follow. 2. Employee 328698 in Manufacturing also has a performance score of 1 with a salary of $46,000 and a $2,000 bonus. This employee is the lowest-ranking employee in this department, however, they are ranked as essential- so this would need some clarification. 3. Employee 513076 in Management has a current performance score of two with a salary of $370,804 and no bonus. This manager is the highest-paid manager with the lowest performance score in this department. 4. Employee 509063 in Account Services has a current performance score of 1 with a salary of $42,000 and a bonus of $2,000. Again, this employee has the lowest performance score in their

5 department. Notes on this employee tell me that they lack motivation, and collide with management often. Although the decision to terminate employees does not come easy, we must have employees who meet company expectations as we grow. Should we choose to move forward with termination, this would reduce our budget by $525,804.00, which is over the ten percent goal. If we do not decide to move forward with terminating select employees, then we will be able to use data to readjust salaries, overtime, and bonuses.

6 References Soomo Learning. (2020). Critical business skills for success . https://www.webtexts.com

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