only do question number one.

1. Strategy: Strategically Managing Turnover at IndyMac Mortgage originator California-based IndyMac Bank focused on building customer relationships and pursued a growth strategy. The overall turnover rates at the Pasa- dena, California, office were 500 to 10 percentage points above industry benchmarks, ranging from over 40 per- cent for sales and operations to the low teens for profes- sionals and management. Traditional turnover analysis suggested that IndyMac should have been hemorrhaging money. Instead, the company substantially outperformed its competitors. 160 How could this be true? The answer lies in the bank's understanding of the costs and benefits of different types of turnover. In fact, the company calculated the break point where the financial benefits of the firm's turnover outweighed the costs. For example, higher turnover was acceptable for low-impact, nonexempt operating positions. When an em- ployee left one of these jobs, IndyMac pocketed the savings when other employees picked up the workload for the 30 to 60 days that the average position is open, plus additional sav- ings when an annual bonus was not paid out to the person who left or when a replacement employee was brought in at a slightly lower salary level. On the other hand, turnover among the firm's high-impact professional and managerial employees could cause a 6-month delay on a multimillion- dollar project and cost IndyMac millions of dollars. Optimal turnover rates were measured within a green- yellow-red range and differed for each job category and for performance levels within each category. The turnover rates in the green band were financially beneficial for the firm the turnover rates within the yellow band (the broad. est band) were cost-neutral and had a minimal impact on the company. By contrast, turnover rates that climbed into the red band began to significantly hurt the organization. 62 After calculating the break point of turnover for dif ferent job categories, IndyMac turned its attention to understanding the drivers of turnover and analyzed data on many of its 5000 employees to identify what matters most to specific segments of its workforce. It used the results of these analyses to better retain top performers. The bank also used steep performance-based pay differentials to maintain desired turnover rates among its high and low performers. 164 a. What financial benefits did IndyMac Bank receive because of its turnover? b. What were some of the financial costs of turnover for Indy Mac? c. What are some of the likely the long-term conse- quences of the bank's turnover strategy? d. If you were in charge of improving the retention of IndyMac's bank managers, what process would you use to do this? 2. Develop Your Staffing Skills: Effective Termination Meetings This chapter's Develop Your Staffing Skills feature presented you with some tips on how to terminate an em- ployee. Identify a partner and choose who will be the first to be terminated. Imagine that the person being termin- ated has been a front desk manager for Sunrise Hotel for 3 years. After performing very well the first year, the man- ager earned mediocre performance reviews last year and even lower reviews this year. After going to two develop ment programs in the last year to improve the front desk manager's customer service skills, his or her performance continued to worsen, and the company has decided to ter minate the manager. The termination is effective immedi- ately, and the hotel is willing to offer 2 weeks of pay as severance if the manager is willing to sign a release of his or her legal rights to sue for wrongful discharge. The per son doing the firing is the hotel's general manager and has been the front desk manager's supervisor for the entire 3 years. In fact, the two of you have become friends. Using the additional background information your instructor gives you and the tips in this chapter's