Quant Tools Costing

8/3/2019 Quant Tools Costing

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FIRM STRATEGY-HUMAN RESOURCESTRATEGY RELATIONSHIPFirm Strategy

Human Resource Strategy

Growth/Expansion

Retrenchment

Diversification

Mergers, Acquisitions

Differentiation

Low-Cost Producer

Luxury/High Quality

Aggressive Hiring, Training,Promotions

Layoffs, Terminations, EarlyRetirement

New Corporate Staff Configuration,

Promotions, Training, Hiring

Corporate Acculturation, Hiring orLaying Off

Staff Reconfiguration, Layoffs,Reassignments

Decentralized Hiring and Training

Cost Reduction, Wage Cuts,Efficiency Improvements

Hiring Highly Skilled Personnel,Training, Special Compensation

Plans

Divestitures


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DEFINITIONQuantitative approach to managementrequires that decision problems bedefined, analyzed, and solved in aconscious, rational, systematic, and

scientific manner- based on data,facts, information, and logic- and noton mere whim and guess.


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QUANTITATIVE TOOLS

Accurate

Have no Biases

Helps in positioning the actualperformance

Has an internal locus of control
http://images.google.co.uk/imgres?imgurl=http://www.whittiertrust.com/_lib/Image/sidebar_img/managingOutsideManagers.jpg&imgrefurl=http://www.whittiertrust.com/management/investment/managers.php&h=306&w=306&sz=23&hl=en&start=1&tbnid=QTsoShjr_kGO2M:&tbnh=117&tbnw=117&prev=/images%3Fq%3Dmanagers%26gbv%3D2%26hl%3Den%26sa%3DGhttp://images.google.co.uk/imgres?imgurl=http://www.whittiertrust.com/_lib/Image/sidebar_img/managingOutsideManagers.jpg&imgrefurl=http://www.whittiertrust.com/management/investment/managers.php&h=306&w=306&sz=23&hl=en&start=1&tbnid=QTsoShjr_kGO2M:&tbnh=117&tbnw=117&prev=/images%3Fq%3Dmanagers%26gbv%3D2%26hl%3Den%26sa%3DGhttp://images.google.co.uk/imgres?imgurl=http://www.whittiertrust.com/_lib/Image/sidebar_img/managingOutsideManagers.jpg&imgrefurl=http://www.whittiertrust.com/management/investment/managers.php&h=306&w=306&sz=23&hl=en&start=1&tbnid=QTsoShjr_kGO2M:&tbnh=117&tbnw=117&prev=/images%3Fq%3Dmanagers%26gbv%3D2%26hl%3Den%26sa%3DG


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TOPICS

Increasing Validity of Interviews.

Yield Ratio and Implication. Measuring Job Satisfaction.

Manpower Planning/Turnover Indices.

Costing

HR Audit.
http://images.google.co.uk/imgres?imgurl=http://www.whittiertrust.com/_lib/Image/sidebar_img/managingOutsideManagers.jpg&imgrefurl=http://www.whittiertrust.com/management/investment/managers.php&h=306&w=306&sz=23&hl=en&start=1&tbnid=QTsoShjr_kGO2M:&tbnh=117&tbnw=117&prev=/images%3Fq%3Dmanagers%26gbv%3D2%26hl%3Den%26sa%3DGhttp://images.google.co.uk/imgres?imgurl=http://www.whittiertrust.com/_lib/Image/sidebar_img/managingOutsideManagers.jpg&imgrefurl=http://www.whittiertrust.com/management/investment/managers.php&h=306&w=306&sz=23&hl=en&start=1&tbnid=QTsoShjr_kGO2M:&tbnh=117&tbnw=117&prev=/images%3Fq%3Dmanagers%26gbv%3D2%26hl%3Den%26sa%3DGhttp://images.google.co.uk/imgres?imgurl=http://www.whittiertrust.com/_lib/Image/sidebar_img/managingOutsideManagers.jpg&imgrefurl=http://www.whittiertrust.com/management/investment/managers.php&h=306&w=306&sz=23&hl=en&start=1&tbnid=QTsoShjr_kGO2M:&tbnh=117&tbnw=117&prev=/images%3Fq%3Dmanagers%26gbv%3D2%26hl%3Den%26sa%3DGhttp://images.google.co.uk/imgres?imgurl=http://www.whittiertrust.com/_lib/Image/sidebar_img/managingOutsideManagers.jpg&imgrefurl=http://www.whittiertrust.com/management/investment/managers.php&h=306&w=306&sz=23&hl=en&start=1&tbnid=QTsoShjr_kGO2M:&tbnh=117&tbnw=117&prev=/images%3Fq%3Dmanagers%26gbv%3D2%26hl%3Den%26sa%3DGhttp://images.google.co.uk/imgres?imgurl=http://www.whittiertrust.com/_lib/Image/sidebar_img/managingOutsideManagers.jpg&imgrefurl=http://www.whittiertrust.com/management/investment/managers.php&h=306&w=306&sz=23&hl=en&start=1&tbnid=QTsoShjr_kGO2M:&tbnh=117&tbnw=117&prev=/images%3Fq%3Dmanagers%26gbv%3D2%26hl%3Den%26sa%3DGhttp://images.google.co.uk/imgres?imgurl=http://www.whittiertrust.com/_lib/Image/sidebar_img/managingOutsideManagers.jpg&imgrefurl=http://www.whittiertrust.com/management/investment/managers.php&h=306&w=306&sz=23&hl=en&start=1&tbnid=QTsoShjr_kGO2M:&tbnh=117&tbnw=117&prev=/images%3Fq%3Dmanagers%26gbv%3D2%26hl%3Den%26sa%3DGhttp://images.google.co.uk/imgres?imgurl=http://www.whittiertrust.com/_lib/Image/sidebar_img/managingOutsideManagers.jpg&imgrefurl=http://www.whittiertrust.com/management/investment/managers.php&h=306&w=306&sz=23&hl=en&start=1&tbnid=QTsoShjr_kGO2M:&tbnh=117&tbnw=117&prev=/images%3Fq%3Dmanagers%26gbv%3D2%26hl%3Den%26sa%3DGhttp://images.google.co.uk/imgres?imgurl=http://www.whittiertrust.com/_lib/Image/sidebar_img/managingOutsideManagers.jpg&imgrefurl=http://www.whittiertrust.com/management/investment/managers.php&h=306&w=306&sz=23&hl=en&start=1&tbnid=QTsoShjr_kGO2M:&tbnh=117&tbnw=117&prev=/images%3Fq%3Dmanagers%26gbv%3D2%26hl%3Den%26sa%3DGhttp://images.google.co.uk/imgres?imgurl=http://www.whittiertrust.com/_lib/Image/sidebar_img/managingOutsideManagers.jpg&imgrefurl=http://www.whittiertrust.com/management/investment/managers.php&h=306&w=306&sz=23&hl=en&start=1&tbnid=QTsoShjr_kGO2M:&tbnh=117&tbnw=117&prev=/images%3Fq%3Dmanagers%26gbv%3D2%26hl%3Den%26sa%3DGhttp://images.google.co.uk/imgres?imgurl=http://www.whittiertrust.com/_lib/Image/sidebar_img/managingOutsideManagers.jpg&imgrefurl=http://www.whittiertrust.com/management/investment/managers.php&h=306&w=306&sz=23&hl=en&start=1&tbnid=QTsoShjr_kGO2M:&tbnh=117&tbnw=117&prev=/images%3Fq%3Dmanagers%26gbv%3D2%26hl%3Den%26sa%3DGhttp://images.google.co.uk/imgres?imgurl=http://www.whittiertrust.com/_lib/Image/sidebar_img/managingOutsideManagers.jpg&imgrefurl=http://www.whittiertrust.com/management/investment/managers.php&h=306&w=306&sz=23&hl=en&start=1&tbnid=QTsoShjr_kGO2M:&tbnh=117&tbnw=117&prev=/images%3Fq%3Dmanagers%26gbv%3D2%26hl%3Den%26sa%3DGhttp://images.google.co.uk/imgres?imgurl=http://www.whittiertrust.com/_lib/Image/sidebar_img/managingOutsideManagers.jpg&imgrefurl=http://www.whittiertrust.com/management/investment/managers.php&h=306&w=306&sz=23&hl=en&start=1&tbnid=QTsoShjr_kGO2M:&tbnh=117&tbnw=117&prev=/images%3Fq%3Dmanagers%26gbv%3D2%26hl%3Den%26sa%3DGhttp://images.google.co.uk/imgres?imgurl=http://www.whittiertrust.com/_lib/Image/sidebar_img/managingOutsideManagers.jpg&imgrefurl=http://www.whittiertrust.com/management/investment/managers.php&h=306&w=306&sz=23&hl=en&start=1&tbnid=QTsoShjr_kGO2M:&tbnh=117&tbnw=117&prev=/images%3Fq%3Dmanagers%26gbv%3D2%26hl%3Den%26sa%3DGhttp://images.google.co.uk/imgres?imgurl=http://www.whittiertrust.com/_lib/Image/sidebar_img/managingOutsideManagers.jpg&imgrefurl=http://www.whittiertrust.com/management/investment/managers.php&h=306&w=306&sz=23&hl=en&start=1&tbnid=QTsoShjr_kGO2M:&tbnh=117&tbnw=117&prev=/images%3Fq%3Dmanagers%26gbv%3D2%26hl%3Den%26sa%3DG


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RECRUITMENTAND

SELECTION
http://images.google.co.uk/imgres?imgurl=http://www.whittiertrust.com/_lib/Image/sidebar_img/managingOutsideManagers.jpg&imgrefurl=http://www.whittiertrust.com/management/investment/managers.php&h=306&w=306&sz=23&hl=en&start=1&tbnid=QTsoShjr_kGO2M:&tbnh=117&tbnw=117&prev=/images%3Fq%3Dmanagers%26gbv%3D2%26hl%3Den%26sa%3DGhttp://images.google.co.uk/imgres?imgurl=http://www.whittiertrust.com/_lib/Image/sidebar_img/managingOutsideManagers.jpg&imgrefurl=http://www.whittiertrust.com/management/investment/managers.php&h=306&w=306&sz=23&hl=en&start=1&tbnid=QTsoShjr_kGO2M:&tbnh=117&tbnw=117&prev=/images%3Fq%3Dmanagers%26gbv%3D2%26hl%3Den%26sa%3DGhttp://images.google.co.uk/imgres?imgurl=http://www.whittiertrust.com/_lib/Image/sidebar_img/managingOutsideManagers.jpg&imgrefurl=http://www.whittiertrust.com/management/investment/managers.php&h=306&w=306&sz=23&hl=en&start=1&tbnid=QTsoShjr_kGO2M:&tbnh=117&tbnw=117&prev=/images%3Fq%3Dmanagers%26gbv%3D2%26hl%3Den%26sa%3DGhttp://images.google.co.uk/imgres?imgurl=http://www3.imperial.ac.uk/pls/portallive/docs/1/7290907.JPG&imgrefurl=http://www3.imperial.ac.uk/staffdevelopment/workshops/index_recruitment&h=363&w=300&sz=22&hl=en&start=5&tbnid=HMShmMaolQfv8M:&tbnh=121&tbnw=100&prev=/images%3Fq%3DRECRUITMENT%2BAND%2BSELECTION%26gbv%3D2%26hl%3Den%26sa%3DGhttp://images.google.co.uk/imgres?imgurl=http://youthforum.asia2002.gov.hk/photo_album/Photo_Gallery_SourceFile/Selection%2520Interview/meeting08.jpg&imgrefurl=http://youthforum.asia2002.gov.hk/photo_album/photogallery.htm&h=600&w=900&sz=466&hl=en&start=15&tbnid=1Yeufsu-R1D2FM:&tbnh=97&tbnw=146&prev=/images%3Fq%3Dinterview%2Band%2Bselection%26gbv%3D2%26hl%3Den%26sa%3DGhttp://images.google.co.uk/imgres?imgurl=http://www.thomasinternational.net/Portals/9/PR%2520andMarketing/Images/322148RKNRGB1.jpg&imgrefurl=http://www.thomasinternational.net/Default.aspx%3Falias%3Dwww.thomasinternational.net/recruiter&h=484&w=722&sz=219&hl=en&start=28&tbnid=aNB0lQADT8tSjM:&tbnh=94&tbnw=140&prev=/images%3Fq%3DRECRUITMENT%2BAND%2BSELECTION%26start%3D20%26gbv%3D2%26ndsp%3D20%26hl%3Den%26sa%3DNhttp://images.google.co.uk/imgres?imgurl=http://www3.imperial.ac.uk/pls/portallive/docs/1/7290907.JPG&imgrefurl=http://www3.imperial.ac.uk/staffdevelopment/workshops/index_recruitment&h=363&w=300&sz=22&hl=en&start=5&tbnid=HMShmMaolQfv8M:&tbnh=121&tbnw=100&prev=/images%3Fq%3DRECRUITMENT%2BAND%2BSELECTION%26gbv%3D2%26hl%3Den%26sa%3DG


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RELIABILITY & VALIDITY Validity-It refers to what a test or

selection device measures and how well

it measures it. Reliability-The extent to which interviews,

tests, and other selection tools yield

comparable data over a period of time


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Procedure:

1. Frame questions as per requirement.

2. Rate each item of the test according to criteria. *0 = not necessary on the job

1 = useful on the job

2 = essential to the job

3. Apply the content validity ratio.

NeN / 2

CVR = N / 2

Ne = the number of panel members who give the item a rating of essential to thejob ((.e. 2).

N = total number of experts

CVI = average of CVRs

4. Calculate the content validity index.

ESTABLISING CONTENTVALIDITY OF QUESTIONS


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INCREASING VALIDITY OFINTERVIEW

Source: C.H.Lawshe; A quantitative Approach to content validity, PersonnelPsychology.

TEST ITEMS Judge 1 Judge 2 Judge 3 Judge 4

1 0 0 1 12 2 2 2 23 2 1 1 14 2 2 2 25 2 2 2 2

*0 = not necessary on the job1 = useful on the job2 = essential to the jobNe N / 2CVR = N / 2CVR item 1 = (0 2) / 2 = - 1.0 delete item

CVR item 2 = (4

2) / 2 = 1.0 retain itemCVR item 3 = (1 2) / 2 = - 0.5 delete itemCVR item 4 = (2 2) / 2 = 0.0 delete itemCVR item 5 = (4 2) / 2 = 1.0 retain itemCVR for retained items (1.0 + 1.0) / 2 = 1Content Validity Index (CVI) = average of CVRs.


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Number of Judges Required Content

Validation Ratio5 .99

8 .75

10 .6215 .49

30 .33

TABLE 11.3:REQUIRED LEVEL OF CONTENT VALIDATIONRATIO TO REACH STATISTICAL SIGNIFICANCE AS AFUNCTION OF THE NUMBER OF JUDGES.


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High

Low

JobBehaviors

Low HighSelection procedure scores

D: False

negatives

A: True

Positives

B: FalsePositives

C: Truenegatives

Satisfactory

Unsatisfactory

Pe

rformance

cu

toffscore

Unqualified Qualified

Selection ratio

Baserate

Selection cutoff score


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Validity Correlation Analysis after Cut Scores is

lowered

Satisfactory

Unsatisfacto

ry

Job

Perform

ance

Lo

w

Test

score

0 50 70

D

E

C


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Validity Correlation Analysis after Cut Scores is

raised

Satisfactory

Unsatisfacto

ry

Jo

b

Perform

ance

Lo

w

Test

score

0 50 70

D

E

C

A

B

High98-100


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Employee Testing and Selection(Highest 20%) 57-64 97

(Next highest 20%) 51-56

84

(Middle 20%) 45-50 71

(Next lowest 20%) 37-44

55

(Lowest 20%) 11-36 29

0 20 40 60 80 100

TestScores

Chances in a hundred of being rated a high performer; and %

of high performers found in each test score group


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Joined : 20 : 10yR =50%

Offered : 50 : 20yR :40%

Interview 100 : 50yR = 50%

Tested : 200 : 100yR = 50%

Short listed 2000 : 200yR =10%

YIELD RATIO


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Table 10.4: Hypothetical Yield Ratio for Five Different Recruitment Sources

Local

University

Renowned

University

Employee

Referrals

Newspaper

Ad

Executive

Search Firms

Resumes

generated200 400 50 500 20

Interview offers

accepted175 100 45 400 20

Yield ratio 87% 25% 90% 80% 100%

Judged

acceptable

100 95 40 50 19

Yield ratio 57% 95% 89% 12% 95%

Accept

employment

offers

90 10 35 25 15

Yield ratio 90% 11% 88% 50% 79%

Cumulative 90/200 10/400 35/50 25/500 15/20

Yield ratio 45% 3% 70% 5% 75%

Cost $30,000 $50,000 $15,000 $20,000 $90,000

Cost per hire $333 $5,000 $428 $8000 $6,000


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MAN-POWER PLANNING
http://images.google.co.uk/imgres?imgurl=http://www.co.fort-bend.tx.us/upload/images/emergency_management/DSC01327%255B1%255D.JPG&imgrefurl=http://www.co.fort-bend.tx.us/getSitePage.asp%3FsitePage%3D12343&h=360&w=480&sz=93&hl=en&start=9&tbnid=fiw6pWzecYBY1M:&tbnh=97&tbnw=129&prev=/images%3Fq%3Dplanning%2Bcommittee%26gbv%3D2%26hl%3Den%26sa%3DG


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A HYPOTHETICAL TRANSITIONAL MATRIXFOR AN AUTO PARTS MANUFACTURER1993 1996(1) (2) (3) (4) (5) (6) (7) (8)Sales manager .95 .05

Salesrepresentative

.05 .60 .35

Sales apprentice .20 .05 .30

Assistant plantmanager

.90 .05 .05

Productionmanager

.10 .75 .15

Productionassembler

.10 .80 .10

Clerical .70 .30

Not in organization .00 .20 .50 .00 .10 .20 .30


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BOWEY TURNOVER INDEXPurpose: Reflect the stability of manpower index of an org as

compared to industry.

Formula:1) Sum of month served by staff currently employed * 100

2) Sum of possible months in service by full staff

e.g:

Workstation requirement of workers: 20

Pattern of Turnover

Persons Months Possible months

5 * 24 = 120 20 * 24 months : 480 (2)5 * 12 = 60

10 * 6 = 60

240 (1)


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Entry Cohort Original

strengthNumber surviving to end of year after engagement

Year 1 Year 2 Year 3 Year 4 Year 5

A 40 35 28 26 22 20

B 32 25 24 19 18 17

C 48 39 33 30 25 23

D 38 32 27 24 22 19

E 42 36 30 26 23 21

TOTAL 200 167 142 125 110 100

Averagesurvival rate 100% 83% 71% 62% 55% 50%

TABLE 24.1: SURVIVAL RATE ANALYSIS


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HR AUDIT Debate still in infancy

Efficient and economic use of resources

Increased attention to contribution ofemployees

Wastage and attrition cost

Job satisfaction of employees


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SOURCE COST PERRECRUIT cost per recruit (SC/R)

SC/R =AC = AF + NC / R

AC = advertising costs, total monthlyexpenditure

AF=agency fees, total for the month

NC=no-cost applicants, walk-in, nonprofit agencies etc

R=total recruits

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SEPARATION COSTS

1.Exit interview = cost for salary and

benefits of both interviewer anddeparting employee during the exitinterview.

2. Administrative and record keepingaction


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REPLACEMENT COSTS

1 Advertising for job opening.

2 Pre-employment administrativefunctions and record keeping action.3 Selection interview.4 Employment tests.

5 Meetings to discuss candidates(salary and benefits of managers whileparticipating in meetings).


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TRAINING COST Booklets, manuals and reports. Education =$240/days for new employees salary and

benefits x 10 days of workshops, seminars, orcourses.

One-to-one coaching = ($240/day/new employee+ $240/day /staff cost or job expert) x 20 days.

Salary and benefits of a new employee until he or shegets up to par = $240/day for salary and benefits x20days.

Source: Cost for a US Company 2002.

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