The Calleeta Corporation
May 15, 2011
Identify three key business issues facing Jan, Calletta’s CEO.
As Calletta’s CEO, Jan is facing a number of problems such as: lack of support from board members/investors, increasing employee costs, and protests against Calletta’s offshore facilities due to the growing concern of working conditions. Jan key issue on hand is the lack of support from board members and investors. Board Members and investors right now are not supporting Jan or her proposal due to a poor return on investments. Board Members are concerned about the rapid increase of employee cost the company is incurring. Calletta is incurring a 12% cost increase annually compared to an industry average rate of just 4% in the…show more content…
Therefore to meet the Board of Directors demands Calleta would have to focus on cutting employee costs in the area of employee benefits. The first area Calleta can cut cost is in employee’s personal benefits. Calleta can cut employee cost by only paying a percentage of employee’s healthcare, dental, and life insurance versus providing these benefits at no cost to the employee. This approach along should reduce Calleta’s cost tremendously considering the increasing cost of healthcare. This method would not hurt Calleta recruiting shceme because it’s a method most U.S. companies are adopting. According the Los Angeles Times, “in 2010 nearly a third of employers reported that they either reduced the scope of benefits they are offering this year or increased the amount that workers must pay out of pocket for their medical care”. This approach will share the liability of cost with employees instead of Calleta taking on the full incurred cost. By sharing the cost for healthcare and insurance benefits Calleta will be able to cut employee cost drastically.
Another change that Calleta can make to meet the Board of Directors demand is reducing the 401k match from 10% to 5%. Calleta currently offers a very generous 401k plan that exceeds most competitors’ plans within the industry. With the current 401k plan Calleta is losing a massive amount of money in matching