Question

With the low wages and high turnover - does this matter as much for their labor work force? They are not hiring high-skills labor for the most part in their stores. How would you convince the CFO that the investment in employees now, isn't just a financial number of replacing cheap labor?

Answer 1

Following justifications could help convince the CFO:

1. With high turnover, employee productivity decreases, quality and organization metrics are not met.

2. Uncertainty is high with such an employee base and hence demand can't be met, because although they are lowly skilled but production depends on them only.

3. Extra effort needs to be put to train the new ones. Succession planning becomes really difficult.

4. Company image worsens and hence the customer perception and finally demand for the product.

With all these factors in place, the demand for the product will drop which will affect both the top and bottom line of the company.