| Course | GB545 Strategic Total Rewards and Financial Impact |
|---|---|
| Unit | Unit 4 |
| Paper type | Labor cost model |
| Length | About 900 words, 6 pages double-spaced |
| Format | APA 7 student paper |
| School | Purdue University Global |
| Program | MBA |
| Updated | October 2026 |
Free sample paper for GB545 Unit 4
Labor Cost Growing Faster Than Revenue: A Unit 4 Three-Year Labor Cost Model for an Analyzer Maker
[Student Name]
Purdue University Global
GB545: Strategic Total Rewards and Financial Impact
Unit 4 Labor Cost Model
[Instructor Name]
[Date]
The company, its operating plan and every assumption and projection are composite and illustrative; the frameworks and sources cited are real.
Driver Table
Each assumption is listed with its source, because every projected figure depends on these lines.
Headcount growth: 3 percent in year one, 4 percent in year two and 2 percent in year three, from the operating plan, taking headcount from 2,400 to 2,472, 2,571 and 2,622.
Merit and promotion: merit budget of 3.5 percent a year plus 0.8 percent for promotions, from the compensation plan, for growth in average base pay of 4.3 percent.
Health cost trend: 7.5 percent a year per enrolled employee, a labeled assumption standing in for the trend projections benefits consultants publish each year, applied on top of headcount growth.
Retirement match participation: 78 percent today, rising to 82 percent in year one and 84 percent from year two after automatic enrollment begins, with the match costing about 4.5 percent of a participant's base. Madrian and Shea (2001) found that automatic enrollment sharply raised participation in a large employer's plan, which supports an increase of this size.
Annual bonus: paid at target, 6.9 percent of base, from year one, against 92 percent of target in the base year.
Commissions: from the sales plan's bookings forecast, rising 7.6, 6.2 and 6.0 percent.
Restricted stock: grant value growing 4 percent a year, as finance records stock compensation as an expense.
Payroll taxes: an effective 7.1 percent of base, bonus and commissions.
Other lines: life and disability insurance grow with base pay; vans grow with headcount and 3 percent fleet inflation; tuition and assistance contracts are held flat.
Three-Year Projection
Base year: $291,712,045 on revenue of about $920.2 million, 31.7 percent.
Year one: $315.4 million. Base pay $210.75 million, health $31.55 million, bonus $14.55 million, restricted stock $14.77 million, commissions $13.18 million, payroll taxes $16.93 million, retirement match $7.78 million, vans $3.75 million, life and disability $1.57 million and other lines $0.56 million. Revenue about $976.3 million; labor cost 32.3 percent of revenue.
Year two: $342.3 million. Base pay $228.61 million, health $35.27 million, payroll taxes $18.35 million, bonus $15.79 million, restricted stock $15.36 million, commissions $14.00 million and match $8.64 million. Revenue about $1,033.9 million; 33.1 percent.
Year three: $364.8 million. Base pay $243.21 million, health $38.68 million, payroll taxes $19.51 million, bonus $16.79 million, restricted stock $15.97 million, commissions $14.84 million and match $9.19 million. Headcount 2,622. Revenue about $1,096.0 million; 33.3 percent.
Where the Difference Comes From
Over three years, base pay rises 24.0 percent, which by itself would track revenue fairly closely. The gap comes from the lines that grow faster than base. Health spending climbs 35.7 percent, because medical trend compounds on top of headcount growth. The retirement match rises 33.5 percent as automatic enrollment lifts participation. The bonus rises 34.8 percent, partly because the base year paid below target. Together, these lines explain most of the six-point gap.
Labor cost outgrows revenue not because people are paid more but because health trend, match participation and a return to target bonus all compound faster than sales.
Tying every line to revenue would have hidden that finding. Cascio et al. (2019) argue that HR costs should be modeled from their own drivers so that leaders can see which decisions move them, and the driver table makes each one visible.
Sensitivity Panel
Health trend at 10 percent instead of 7.5. Adds $733,746 in year one, $1,659,734 in year two and $2,761,712 in year three, the largest single uncertainty because the employer controls it least.
Merit one point higher, at 5.3 percent. Adds $2,403,231, $5,242,623 and $8,406,296, through base pay and everything loaded on it.
Automatic enrollment does not raise participation. Saves $379,417, $617,341 and $656,765, but at the cost of lower retirement savings for employees.
The model's year-three result is therefore most sensitive to merit, which leadership sets each year, and next most sensitive to health trend, which plan design in Unit 5 can partly offset.
Limits
The model treats each driver as independent, although in practice they interact; a tight labor market that pushes merit up may also raise turnover and slow headcount growth. It assumes the workforce mix stays constant, so a shift toward higher-paid engineering roles would raise base pay faster than shown. Milkovich et al. (2020) point out that average pay can rise even with a flat merit budget when the mix of jobs changes, and the strategy's emphasis on engineering makes that likely here. The health trend is a single figure for all plans, while Tellwater's actual cost will depend on the plan design chosen in Unit 5. Finally, commissions follow the sales plan, which has missed its bookings forecast in two of the last four years. Each of these limits argues for rerunning the model every quarter with actual results rather than treating it as a fixed forecast.
What the Model Tells Leadership
Labor cost will rise from 31.7 to 33.3 percent of revenue unless something changes. The levers are clear: merit budgets, health plan design and the targets the bonus pays against. Each is examined in a later unit.
References
Cascio, W. F., Boudreau, J. W., & Fink, A. A. (2019). Investing in people: Financial impact of human resource initiatives (3rd ed.). Society for Human Resource Management.
Madrian, B. C., & Shea, D. F. (2001). The power of suggestion: Inertia in 401(k) participation and savings behavior. Quarterly Journal of Economics, 116(4), 1149-1187. https://doi.org/10.1162/003355301753265543
Milkovich, G. T., Newman, J. M., & Gerhart, B. (2020). Compensation (13th ed.). McGraw-Hill Education.
GB545 Unit 4 instructions, in plain terms
In GB545 Unit 4 you build a multi-year labor cost model for an organization. List every driver in a table with its value and source, including headcount, merit and promotion, health trend, retirement participation, incentive payout, payroll taxes and any equity expense. Project each cost line from its own driver rather than from revenue, and show totals and labor cost as a share of revenue for each year. Explain which lines grow fastest and why the total diverges from revenue. Test the assumptions most likely to change the result in a sensitivity panel. State the model's limits. Expect about five pages with one driver table, one projection and the panel, citing sources in APA 7.
How the GB 545 Unit 4 example is put together
The driver table lists headcount growth of 3, 4 and 2 percent, merit of 3.5 percent plus 0.8 for promotions, a labeled 7.5 percent health trend, participation rising from 78 to 84 percent, which Madrian and Shea's work on automatic enrollment supports, and payroll taxes at 7.1 percent. The projection gives each year's lines, reaching $364.8 million on $1,096.0 million of revenue. The highlighted sentence traces the gap to health, match and bonus. Cascio and colleagues support modeling each line from its driver. The panel shows a 10 percent trend adding $2,761,712 by year three and a point of merit adding $8,406,296, and Milkovich and colleagues inform the limits.
Reading the GB545 Unit 4 grading rubric
A strong GB545 labor cost model is graded on whether every projected figure can be traced to a stated driver and source. A driver table that lists each assumption earns points because it makes the model reviewable. Projecting each line from its own driver, not revenue, shows modeling skill. Year-by-year totals with labor cost as a share of revenue let leaders see the trend. Explaining which lines outgrow the total shows analysis. A sensitivity panel that tests the least controllable inputs shows judgment. Ranking the sensitivities shows priority. Stating limits, such as job mix, shows care. Cascio and colleagues, Madrian and Shea, and Milkovich and colleagues are cited in APA 7.
GB545 Unit 4 help: mistakes that cost points
Many GB545 Unit 4 models grow every cost line at the revenue rate, which hides the finding the course is looking for: some components outgrow sales. Others list assumptions without sources, so a reader cannot judge whether they are reasonable. A frequent gap is the base year: a bonus paid below target, or participation about to change, makes the next year jump in ways a simple growth rate misses. Some writers leave equity out without saying so. List every driver with its source, project each line separately, show totals and the share of revenue, explain the divergence, test the shakiest inputs and state limits. Rerunning the model quarterly keeps it useful.
Get a GB545 Unit 4 example written to your instructions
Raw material for the model is headcount, pay and benefit data, as laid out in the Unit 4 case; attach that, any planning assumptions the prompt fixes, and the rubric. What returns inside 24-48h is a three-year model, drivers sourced, components carried separately and sensitivity tested. Nothing is charged for a first request. The paper above is an original model document written by our desk, not a submitted student paper and not an official Purdue University Global document.
More GB545 papers and MBA samples
- GB545 Unit 1: Discussion Board Post
- GB545 Unit 2: Rewards Program Audit
- GB545 Unit 3: Market Position Memo
- GB545 Unit 5: Benefit Plan Comparison
- GB545 Unit 6: Seminar Reflection
- GB545 Unit 7: Incentive Plan Proposal
- GB545 Unit 8: Pay Equity Analysis
- GB545 Unit 9: Executive Compensation Review
- GB545 Unit 10: Rewards Business Case
- GB542 Unit 4: Workforce Plan
- GB541 Unit 4: Policy Review Memo
- GB534 Unit 4: Perception Study
GB545 Unit 4 questions, answered
Why not grow labor cost at the revenue growth rate?
Because the components move for different reasons. Base pay follows headcount and merit, health cost follows medical trend, and match cost follows participation, which in the example jumps after automatic enrollment. Tying everything to revenue would hide the finding that labor cost outgrows revenue by six points over three years. Build each line from its own driver and compare the total with revenue afterward.
Where does a 7.5 percent health trend come from?
In the example it is a labeled assumption standing in for the trend projections that benefits consultants and actuaries publish each year, and the sensitivity panel tests 10 percent beside it. Use whatever figure your case provides or your section permits, cite its date, and test a higher value, because health trend is the input least under the employer's control.
Should equity grants appear in a labor cost model?
Most finance teams include them because stock compensation is recorded as an expense, even though no cash leaves the company at grant. The example carries restricted stock at grant value and grows the pool 4 percent a year. Some instructors prefer a cash-only model. Either works if the choice is stated, since equity can move labor cost by several million dollars.
Where can I find a free GB545 Unit 4 sample paper?
This page carries a full GB545 Unit 4 three-year labor cost model for a composite analyzer maker, with a driver table, projection, sensitivity panel and APA 7 references.
Which assumption moves the model most?
Merit. One extra point of merit adds about $8.4 million by year three because base pay carries taxes, bonus and match with it. Health trend comes next, adding about $2.76 million at 10 percent.