Quantitative tools for HR managers

04/11/2304/11/23 16:2816:28 IBP PRESENTATIONIBP PRESENTATION 11

Facilitator:Facilitator:Mr. Raza Kamal, Mr. Raza Kamal,

Director, College of Management Director, College of Management Sciences, Sciences,

PAF-KIET.PAF-KIET.

WORKSHOPWORKSHOPONON

QUANTITATIVE TOOLS FOR HR QUANTITATIVE TOOLS FOR HR MANAGERSMANAGERS

Tuesday - 05Tuesday - 05thth Aug, 2008. Aug, 2008. Institute of Bankers, Pakistan.Institute of Bankers, Pakistan.


OBJECTIVE OF THE OBJECTIVE OF THE

WORKSHOPWORKSHOP

To enhance the effectiveness To enhance the effectiveness of HR managers through the of HR managers through the

use of quantitative tools use of quantitative tools which will also enable them to which will also enable them to benchmark their own results benchmark their own results against other organizationsagainst other organizations


DEFINITIONDEFINITION

Quantitative approach to Quantitative approach to management requires that decision management requires that decision problems be defined, analyzed, and problems be defined, analyzed, and

solved in a conscious, rational, solved in a conscious, rational, systematic, and scientific manner- systematic, and scientific manner- based on data, facts, information, based on data, facts, information, and logic- and not on mere whim and logic- and not on mere whim

and guess.and guess.


QUANTITATIVE QUANTITATIVE TOOLSTOOLS

AccurateAccurate Have no BiasesHave no Biases Helps in positioning the actual Helps in positioning the actual

performanceperformance Has an internal locus of controlHas an internal locus of control


TOPICSTOPICS

Increasing Validity of Interviews.Increasing Validity of Interviews. Yield Ratio and Implication.Yield Ratio and Implication. Measuring Job Satisfaction.Measuring Job Satisfaction. Manpower Planning/Turnover Indices.Manpower Planning/Turnover Indices. HR Audit.HR Audit.


The most effective employee of The most effective employee of work units are those providing the work units are those providing the

highest possible quantity and highest possible quantity and quality of work at the lowest cost quality of work at the lowest cost

and in the most timely fashion and in the most timely fashion with the minimum of supervision with the minimum of supervision and with a maximum of positive and with a maximum of positive

impact on workers, organizational impact on workers, organizational units and clients/customer units and clients/customer

populationpopulation

PHILOSOPHY OF PHILOSOPHY OF HRMHRM


RECRUITMENRECRUITMENTT

AND AND

SELECTIONSELECTION


MOST IMPORTANT MOST IMPORTANT SELECTION METHODSSELECTION METHODS

InterviewInterview Assessment Assessment CenterCenter

Psychology Psychology TestsTests Application FormApplication Form ReferencesReferences N / %N / %

Most Most important important selection selection method (%)method (%)

8585 77 33 55 00178 / 178 / 100100

Second Second most most important important method (%)method (%)

1515 11 3535 3232 1717 148 / 148 / 100100

Third most Third most important important method(%)method(%)

00 00 3535 2020 4545 96/ 96/ 100100


USE OF SELECTION TESTS USE OF SELECTION TESTS BY EMPLOYEE GROUPSBY EMPLOYEE GROUPS

Employee Employee groupgroup

Cognitive Cognitive Tests (%)Tests (%)

Personality Tests Personality Tests (%)(%)

Literacy / Numeracy Literacy / Numeracy Tests (%)Tests (%)

ManualManual 1414 11 1919

ClericalClerical 3131 1515 4343

GraduateGraduate 2020 2929 1919

Professional/Professional/TechnicalTechnical 66 55 55

Managerial / Managerial / Senior Senior ManagerialManagerial

2929 5050 1414

NN 100 (115)100 (115) 100 (136)100 (136) 100 (174)100 (174)


RELIABILITY & RELIABILITY & VALIDITYVALIDITY

ValidityValidity-It refers to ‘what’ a test or -It refers to ‘what’ a test or selection device measures and ‘how well’ selection device measures and ‘how well’ it measures it.it measures it.

Reliability-Reliability-The extent to which interviews, The extent to which interviews, tests, and other selection tools yield tests, and other selection tools yield comparable data over a period of time comparable data over a period of time


Measure all job applications on

attribute

Hire some applicants and reject others

Wait for some time period

Measure all newly hired job incumbents’ performance

Obtain correlation between these two sets of numbers

Predictive Validation

Concurrent Validation

GRAPHIC DEPICTION OF GRAPHIC DEPICTION OF CONCURRENT AND PREDICTIVE CONCURRENT AND PREDICTIVE

VALIDATION DESIGNSVALIDATION DESIGNS

Measure all current job incumbents on

attribute

Measure all current job incumbents’

performance

Obtain correlation between these two sets of numbers


ACCURACY OF SELECTION ACCURACY OF SELECTION METHODS PREDICTED VALIDITY METHODS PREDICTED VALIDITY

PERFECT PREDICTIONPERFECT PREDICTION

ASSESSMENT CENTRES (PROMOTION)ASSESSMENT CENTRES (PROMOTION)

ABILITY TESTSABILITY TESTS

PERSONALITY TESTS (COMBINATION)PERSONALITY TESTS (COMBINATION)

BIODATABIODATA

STRUCTURED INTERVIEWSSTRUCTURED INTERVIEWS

TYPICAL INTERVIEWSTYPICAL INTERVIEWS

REFERENCESREFERENCES

ASTROLOGYASTROLOGY

READING HANDSREADING HANDS

100100

9090

8080

7070

6060

5050

4040

3030

2020

1010

0h0h

CHANCE CHANCE PREDICTIONPREDICTION


TYPE OF INTERVIEWSTYPE OF INTERVIEWS

1.1. UNSTRUCTUREDUNSTRUCTURED

2.2. STRUCTUREDSTRUCTURED

3.3. STRESSSTRESS

4.4. APPRAISALAPPRAISAL

5.5. SITUATIONALSITUATIONAL

6.6. BEHAVIORALBEHAVIORAL


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.

Ne – N / 2CVR = N / 2

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

N = total number of expertsCVI = average of CVRs

4. Calculate the content validity index.

ESTABLISHING VALIDITY ESTABLISHING VALIDITY OF QUESTIONSOF QUESTIONS


INCREASING VALIDITY OF INCREASING VALIDITY OF INTERVIEWINTERVIEW

TEST ITEMSTEST ITEMS Judge 1Judge 1 Judge 2Judge 2 Judge 3Judge 3 Judge 4Judge 4

11 00 00 11 11

22 22 22 22 22

33 22 11 11 11

44 22 22 22 22

55 22 22 22 22

*0 = not necessary on the job 1 = useful on the job 2 = essential to the job

Ne – N / 2CVR = N / 2

CVR item 1 = (0 – 2) / 2 = - 1.0 delete itemCVR 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 item CVR for retained items (1.0 + 1.0) / 2 = 1Content Validity Index (CVI) = average of CVRs.


Number of Judges Required Content Validation Ratio

5 .99

8 .75

10 .62

15 .49

30 .33

TABLE 11.3:REQUIRED LEVEL OF CONTENT TABLE 11.3:REQUIRED LEVEL OF CONTENT VALIDATION RATIO TO REACH STATISTICAL VALIDATION RATIO TO REACH STATISTICAL

SIGNIFICANCE AS A FUNCTION OF THE NUMBER SIGNIFICANCE AS A FUNCTION OF THE NUMBER OF JUDGES.OF JUDGES.


PICKING PEOPLE – THE BASIC PICKING PEOPLE – THE BASIC RULESRULES

(Peter F. Drucker)(Peter F. Drucker)

•Look at these candidates. Think through the Look at these candidates. Think through the assignment.assignment.

•Think hard about how to look Think hard about how to look

•Look at a number of potentially qualified Look at a number of potentially qualified peoplepeople

•Discuss each of the candidates with several Discuss each of the candidates with several people who have worked with them.people who have worked with them.

•Make sure the appointee understands the job.Make sure the appointee understands the job.


FIRM STRATEGY-HUMAN FIRM STRATEGY-HUMAN RESOURCE STRATEGY RESOURCE STRATEGY

RELATIONSHIPRELATIONSHIP Firm StrategyFirm Strategy Human Resource StrategyHuman Resource Strategy

Growth/Expansion

Retrenchment

Diversification

Mergers, Acquisitions

Differentiation

Low-Cost Producer

Luxury/High Quality

Aggressive Hiring, Training, Promotions

Layoffs, Terminations, Early Retirement

New Corporate Staff Configuration, Promotions, Training, Hiring

Corporate Acculturation, Hiring or Laying Off

Staff Reconfiguration, Layoffs, Reassignments

Decentralized Hiring and Training

Cost Reduction, Wage Cuts, Efficiency Improvements

Hiring Highly Skilled Personnel, Training, Special Compensation

Plans

Divestitures


YIELD RATIOYIELD RATIO


Joined : 20 : 10yR = 2 : 1Offered : 50 : 20yR : 5 : 2

Interview 100 : 50yR = 2 : 1

Tested : 200 : 100yR = 2 : 1

Short listed 2000 : 200yR = 10 : 1

YIELD YIELD RATIORATIO


Table 10.4: Hypothetical Yield Ratio for Five Different Recruitment Sources

Local University

Renowned University

Employee Referrals

Newspaper Ad

Executive Search Firms

Resumes generated

200200 400400 5050 500500 2020

Interview offers accepted

175175 100100 4545 400400 2020

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

Judged acceptable

100100 9595 4040 5050 1919

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

Accept employment offers

9090 1010 3535 2525 1515

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

Cumulative 90/20090/200 10/40010/400 35/5035/50 25/50025/500 15/2015/20

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

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

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


JOBJOB

SATISFACTISATISFACTIONON


THE WORKTHE WORK

RELATIONSHIPSRELATIONSHIPS

PROCEDURALPROCEDURAL TECHNICALTECHNICAL

ASPECTSASPECTS ASPECTSASPECTS

Task varietyTask variety

FeedbackFeedback AutonomyAutonomy

JOBJOB

Clarity and Clarity and meaningfulness of meaningfulness of

goals goals

OrganizationOrganization

Department\Department\

BossBoss

EX

PE

CT

AT

I ON

SE

XP

EC

TA

TIO

NS Aspirations Self-conceptAspirations Self-concept

Self-esteem and efficacySelf-esteem and efficacy

Satisfaction and Skill Satisfaction and Skill varietyvariety

Achievement and Achievement and utilizationutilizationFORMALFORMAL INFORMALINFORMAL

StructuralStructural Social contactsSocial contacts

DesignDesign Peer groupPeer group

Quality of managementQuality of management

IND

IVID

UA

LS

’ NE

ED

SIN

DIV

IDU

AL

S’ N

EE

DS

Job design-a more holistic approachJob design-a more holistic approach


Low absenteeism and Low absenteeism and staff turnoverstaff turnover

Critical Psychological Critical Psychological StateState Personal and Work Personal and Work

Out comesOut comes

High-quality work High-quality work performanceperformance

Core Job DimensionsCore Job Dimensions

Knowledge of the Knowledge of the actual results of the actual results of the work activitieswork activities

FeedbackFeedback

High satisfaction with High satisfaction with the workthe work

Experienced Experienced responsibility for responsibility for outcomes of the workoutcomes of the work

AutonomyAutonomy

CORE DIMENSIONS OF THE CORE DIMENSIONS OF THE JOBJOB

Experienced Experienced meaningfulness of the meaningfulness of the workwork

High internal work High internal work motivationmotivation

Skill varietySkill variety

Task identityTask identity

Task significanceTask significance


MANPOWERMANPOWERPLANNINGPLANNING


TRANSITION MATRIX TRANSITION MATRIX (MARKOV ANALYSIS)(MARKOV ANALYSIS)

19971997

19951995 Clerk IClerk I Clerk IIClerk II

Clerk IClerk I 80% (s)80% (s)

Clerk I IClerk I I 60% (s)60% (s)


TRANSITION MATRIX TRANSITION MATRIX (MARKOV ANALYSIS)(MARKOV ANALYSIS)

19971997

19951995 Clerk IClerk I Clerk IIClerk II Left Left OrganizatiOrganizationon

TotalTotal

Clerk IClerk I 80% stayed80% stayed 10% 10% promotedpromoted

10%10% 100%100%

Clerk I IClerk I I 10% 10% demoteddemoted

60% (s)60% (s) 30%30% 100%100%


MARKOV MARKOV

ANALYSISANALYSIS CATEGORYCATEGORY 44 33 22 11 EXITEXIT

GRADE-4GRADE-4 .7.7 .1.1 00 00 .2.2

GRADE-3GRADE-3 .05.05 .8.8 .1.1 00 .05.05

GRADE-2GRADE-2 00 .1.1 .75.75 .05.05 .1.1

GRADE-1GRADE-1 00 00 .05.05 .9.9 .05.05

STAFFINGSTAFFINGREQUIREMENTREQUIREMENT

250250 120120 4040 2020 00

GRADE-4GRADE-4 175175 2525 00 00 5050

GRADE-3GRADE-3 66 9696 1212 00 66

GRADE-2GRADE-2 00 44 3030 22 44

GRADE-1GRADE-1 00 00 11 1818

TOTALTOTAL 181181 125125 4343 2020 6161

VACANTVACANTPOSITIONSPOSITIONS

6969 +5+5 +3+3 00


A HYPOTHETICAL TRANSITIONAL A HYPOTHETICAL TRANSITIONAL MATRIX FOR AN AUTO PARTS MATRIX FOR AN AUTO PARTS

MANUFACTURERMANUFACTURER

1993199319961996

(1) (2) (3) (4) (5) (6) (7) (1) (2) (3) (4) (5) (6) (7) (8) (8)

1. Sales manager1. Sales manager .95 .05.95 .05

2. Sales 2. Sales representativerepresentative

.05 .60 .35.05 .60 .35

3. Sales apprentice3. Sales apprentice .20 .50 .30.20 .50 .30

4. Assistant plant 4. Assistant plant managermanager

.90 .05 .05.90 .05 .05

5. Production 5. Production managermanager

.10 .75 .15.10 .75 .15

6. Production 6. Production assemblerassembler

.10 .80 .10.10 .80 .10

7. Clerical7. Clerical .70 .30.70 .30

8..Not in 8..Not in organizationorganization

.00 .20 .50 .00 .10 .20 .30.00 .20 .50 .00 .10 .20 .30


BOWEY TURNOVER BOWEY TURNOVER INDEXINDEX

Purpose: Reflect the stability of manpower index of an org as compared Purpose: Reflect the stability of manpower index of an org as compared to industry.to industry.

Formula:1) Formula:1) Sum of month served by staff currently employedSum of month served by staff currently employed X 100 X 100 2) Sum of possible months in service by full staff2) Sum of possible months in service by full staff

e.g:e.g:Workstation requirement of workers: 20Workstation requirement of workers: 20Pattern of TurnoverPattern of TurnoverPersonsPersons MonthsMonths Possible monthsPossible months 55 XX 24 24 = 120= 120 20 X 24 months : 480 (2)20 X 24 months : 480 (2) 55 XX 12 12 = 60= 60 1010 XX 6 6 = 60= 60

240 (1)240 (1)


OPTIONS FOR REDUCING AN OPTIONS FOR REDUCING AN EXPECTED LABOR SURPLUSEXPECTED LABOR SURPLUS

OptionOption SpeedSpeed Human Human SufferingSuffering

DownsizingDownsizing FastFast HighHigh

Pay reductionsPay reductions FastFast HighHigh

DemotionsDemotions FastFast HighHigh

TransfersTransfers FastFast ModerateModerate

Work sharingWork sharing FastFast ModerateModerate

RetirementRetirement SlowSlow LowLow

Natural attritionNatural attrition SlowSlow LowLow

RetrainingRetraining SlowSlow LowLow


OPTIONS FOR AVOIDING AN OPTIONS FOR AVOIDING AN EXPECTED LABOR SHORTAGEEXPECTED LABOR SHORTAGE

OptionOption SpeedSpeed Human SufferingHuman Suffering

OvertimeOvertime FastFast HighHigh

Temporary Temporary employeesemployees

FastFast HighHigh

OutsourcingOutsourcing FastFast HighHigh

Retrained TransfersRetrained Transfers SlowSlow HighHigh

Turnover reductionsTurnover reductions SlowSlow ModerateModerate

New external hiresNew external hires SlowSlow LowLow

Technological Technological innovationinnovation

SlowSlow LowLow


Entry CohortEntry Cohort Original Original strengthstrength

Number surviving to end of year after engagementNumber surviving to end of year after engagement

Year 1Year 1 Year 2Year 2 Year 3Year 3 Year 4Year 4 Year 5Year 5

AA 4040 3535 2828 2626 2222 2020

BB 3232 2525 2424 1919 1818 1717

CC 4848 3939 3333 3030 2525 2323

DD 3838 3232 2727 2424 2222 1919

EE 4242 3636 3030 2626 2323 2121

TOTALTOTAL 200200 167167 142142 125125 110110 100100

Average Average survival ratesurvival rate 100%100% 83%83% 71%71% 62%62% 55%55% 50%50%

TABLE 24.1: SURVIVAL RATE TABLE 24.1: SURVIVAL RATE ANALYSISANALYSIS


PROGRAMME PLANNING PROGRAMME PLANNING

OPTIONSOPTIONS

Do not replace employees who leave Do not replace employees who leave Offer incentives for early retirementOffer incentives for early retirementTransfer or re-assign excess employeesTransfer or re-assign excess employeesUse slack time for employees training or Use slack time for employees training or equipment maintenanceequipment maintenanceReduce work hoursReduce work hoursLay-off employeesLay-off employees

If a surplus of employees If a surplus of employees is expected ….is expected ….

Hire new full-time employeesHire new full-time employeesOffer incentives for postponing retirementOffer incentives for postponing retirementRe-hire retired employees on part-time basisRe-hire retired employees on part-time basisAttempt to reduce turnoverAttempt to reduce turnoverBring in overtime for present staffBring in overtime for present staffSubcontract work to another companySubcontract work to another companyHire temporary employeesHire temporary employeesRe-engineer to reduce needs.Re-engineer to reduce needs.

If a shortage of If a shortage of employees is expected employees is expected ….….


HR HR AUDITAUDIT

Debate still in infancyDebate still in infancy Efficient and economic use of resourcesEfficient and economic use of resources Increased attention to contribution of Increased attention to contribution of

employeesemployees Wastage and attrition costWastage and attrition cost Job satisfaction of employeesJob satisfaction of employees


SEPARATION COSTSSEPARATION COSTS

1.Exit interview = cost for salary and 1.Exit interview = cost for salary and benefits of both interviewer and benefits of both interviewer and departing employee during the exit departing employee during the exit interview.interview.

2. Administrative and record keeping 2. Administrative and record keeping actionaction


REPLACEMENT COSTSREPLACEMENT COSTS

1 1 Advertising for job opening.Advertising for job opening.2 Pre-employment administrative 2 Pre-employment administrative functions and record keeping action.functions and record keeping action.3 Selection interview.3 Selection interview.4 Employment tests.4 Employment tests.5 Final Meeting.5 Final Meeting.


TRAINING COSTSTRAINING COSTS

11 Booklets, manuals and reports.Booklets, manuals and reports.2 Training & Education 2 Training & Education 3 Trainer Cost3 Trainer Cost4 Salary and benefits of a new employee 4 Salary and benefits of a new employee during trainingduring training


SOURCE COST PER RECRUITSOURCE COST PER RECRUIT

SC/RSC/R =AC = AF + NC / R=AC = AF + NC / R

Where Where AC = advertising costs, total monthly AC = advertising costs, total monthly

expenditureexpenditure AF=agency fees, total for the monthAF=agency fees, total for the month

NC=no-cost applicants, walk-in, non NC=no-cost applicants, walk-in, non profit agencies etcprofit agencies etc

R=total recruits R=total recruits


COSTING EMPLOYEE COSTING EMPLOYEE BEHAVIORSBEHAVIORS

EffectEffectPayout Payout

ProbabilityProbability(Costs (Costs Saved)Saved)

Payoff, Option 1(Raisewages)Payoff, Option 1(Raisewages) $5,000$5,000 xx .60.60 == $3,000$3,000

Payoff, Option 2 (Career Payoff, Option 2 (Career tracks)tracks) 3,0003,000 xx .20.20 == 600600

Payoff, Option 3 (Benefits Payoff, Option 3 (Benefits package)package) 2,0002,000 xx .10.10 == 200200

Payoff, Option 4 (Flexible Payoff, Option 4 (Flexible hours)hours) 1,5001,500 xx .10.10 == 150150


COSTING EMPLOYEE COSTING EMPLOYEE BEHAVIORSBEHAVIORS

OptionOption Annual CostAnnual CostAnnual Payout Annual Payout

(Benefit)(Benefit)Cost / Cost /

Benefit RatioBenefit Ratio

11 $10,000$10,000 $3,000$3,000 .30.30

22 5,0005,000 600600 .12.12

33 4,0004,000 200200 .05.05

44 3,0003,000 150150 .05.05


COMMENTS ENCOURAGEDCOMMENTS ENCOURAGED


CONCLUSIONCONCLUSION

When an archer misses the mark, When an archer misses the mark, he turns and looks for the fault he turns and looks for the fault within himself. Failure to hit the within himself. Failure to hit the

bull’s eye is never the fault of the bull’s eye is never the fault of the target. To improve your aim- target. To improve your aim-

improve yourself. improve yourself.

Quantitative tools for HR managers

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