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Expert case by Cristian

MBB Second Round - CodeWave employee turnover challenge

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Case Prompt

Assume our client is CodeWave, a large software development firm headquartered in Silicon Valley. The company has a solid reputation in the tech industry and has been in operation for over 15 years. Codewave currently employs approximately 3,000 people and has rapidly expanded in recent years. 

Recently, the company has had difficulty retaining software engineers. Over the last year, the turnover rate for software engineers has risen dramatically, with CodeWave having to fill approximately 200 vacant positions. Simultaneously, the HR department has noticed a significant increase in the average time to fill roles, which now stands at 80 days (the time it takes from when the position becomes available to when a new person is employed and begins working). 

The CEO of CodeWave requested that we assist the Head of HR in determining the root causes of this trend and identifying ways to reverse it.

Question 1:

What are some of the reasons why our turnover rate may have increased?

Question 2:

We're considering implementing an incentive scheme whereby existing employees would get a bonus when they refer a suitable candidate to us. 

What would be some of the potential risks of implementing such a scheme and how can we mitigate them? 

Question 3:

The CEO of CodeWave asked us to consider the referral incentive scheme in more depth. They believe that recommendations can improve both staff retention and the average time it takes to fill positions, but we currently lack any concrete data. 

We want you to calculate the projected annual cost of the referral incentive programme as well as the potential savings in hiring costs based on the following assumptions:

  1. The programme will result in a 25% reduction in the average time to fill positions.
  2. A referral bonus of $5,000 will be paid to the employee for each successful referral.
  3. 50% of the software engineer positions filled in a year will be through referrals.
  4. The average cost per hire for a software engineer who wasn’t referred to us is $15,000, including recruitment fees and other related expenses.
  5. The company operates 250 working days per year.

Keep in mind that the company has to fill approximately 200 vacant positions. 

Question 4:

What else can we do to attract more qualified people and solve our talent gap?

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