WORKSHOP

ON
QUANTITATIVE TOOLS FOR HR MANAGERS  
Tuesday - 05th Aug, 2008.
Institute of Bankers, Pakistan.

Facilitator:
Mr. Raza Kamal,
Director, College of Management Sciences,
PAF-KIET.
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 OBJECTIVE OF THE WORKSHOP

To enhance the effectiveness of HR

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

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 DEFINITION

Quantitative approach to management

requires that decision problems be defined,
analyzed, and solved in a conscious, rational,
systematic, and scientific manner- based on
data, facts, information, and logic- and not on
mere whim and guess.

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 QUANTITATIVE TOOLS

 Accurate
 Have no Biases
 Helps in positioning the actual
performance
 Has an internal locus of control

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 TOPICS

 Increasing Validity of Interviews.

 Yield Ratio and Implication.
 Measuring Job Satisfaction.
 Manpower Planning/Turnover Indices.
 HR Audit.

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 PHILOSOPHY OF HRM

The most effective employee of work units are

those providing the highest possible quantity
and quality of work at the lowest cost and in
the most timely fashion with the minimum of
supervision and with a maximum of positive
impact on workers, organizational units and
clients/customer population

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 RECRUITMENT

AND

SELECTION
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 MOST IMPORTANT SELECTION
METHODS

Assessment Psychology
Interview Application Form References N/%
Center Tests

Most
important 178 /
selection
85 7 3 5 0
100
method (%)
Second
most 148 /
important
15 1 35 32 17
100
method (%)

Third most
96/
important 0 0 35 20 45
method(%) 100

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 USE OF SELECTION TESTS BY
EMPLOYEE GROUPS
Employee Cognitive Personality Tests Literacy / Numeracy
group Tests (%) (%) Tests (%)
Manual 14 1 19
Clerical 31 15 43
Graduate 20 29 19
Professional/T
echnical 6 5 5
Managerial /
Senior 29 50 14
Managerial
N 100 (115) 100 (136) 100 (174)
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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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GRAPHIC DEPICTION OF CONCURRENT AND
PREDICTIVE VALIDATION DESIGNS
Predictive Validation

Measure all current job

incumbents on attribute
Obtain correlation
between these two
sets of numbers
Measure all current job
incumbents’ performance
Concurrent Validation
Measure all job
applications on attribute

Hire some applicants and

reject others
Obtain correlation
between these two
sets of numbers
Wait for some time period

Measure all newly hired job

incumbents’ performance
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 ACCURACY OF SELECTION METHODS
PREDICTED VALIDITY
100 PERFECT PREDICTION
90
80 ASSESSMENT CENTRES (PROMOTION)
70 ABILITY TESTS
60 PERSONALITY TESTS (COMBINATION)
50 BIODATA
40 STRUCTURED INTERVIEWS
30 TYPICAL INTERVIEWS
20 REFERENCES
10 ASTROLOGY
0h READING HANDS
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 TYPE OF INTERVIEWS

1. UNSTRUCTURED
2. STRUCTURED
3. STRESS
4. APPRAISAL
5. SITUATIONAL
6. BEHAVIORAL
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 ESTABLISHING VALIDITY OF
QUESTIONS
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 / 2
CVR = 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 experts
CVI = average of CVRs

4. Calculate the content validity index.

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 INCREASING VALIDITY OF
INTERVIEW
TEST ITEMS Judge 1 Judge 2 Judge 3 Judge 4
1 0 0 1 1
2 2 2 2 2
3 2 1 1 1
4 2 2 2 2
5 2 2 2 2
*0 = not necessary on the job
1 = useful on the job
2 = essential to the job
Ne – N / 2
CVR = N/2

CVR item 1 = (0 – 2) / 2 = - 1.0 delete item

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

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TABLE 11.3:REQUIRED LEVEL OF CONTENT VALIDATION
RATIO TO REACH STATISTICAL SIGNIFICANCE AS A
FUNCTION OF THE NUMBER OF JUDGES.

Number of Judges Required Content

Validation Ratio
5 .99
8 .75
10 .62
15 .49
30 .33
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PICKING PEOPLE – THE BASIC RULES
(Peter F. Drucker)
•Look at these candidates. Think through the
assignment.
•Think hard about how to look
•Look at a number of potentially qualified
people
•Discuss each of the candidates with several
people who have worked with them.
•Make sure the appointee understands the job.
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FIRM STRATEGY-HUMAN RESOURCE
STRATEGY RELATIONSHIP
Firm Strategy Human Resource Strategy

Growth/Expansion Aggressive Hiring, Training,

Promotions
Retrenchment Layoffs, Terminations, Early
Retirement
Diversification New Corporate Staff Configuration,
Promotions, Training, Hiring
Mergers, Acquisitions Corporate Acculturation, Hiring or
Laying Off
Divestitures Staff Reconfiguration, Layoffs,
Reassignments
Differentiation Decentralized Hiring and Training

Low-Cost Producer Cost Reduction, Wage Cuts,

Efficiency Improvements
Luxury/High Quality Hiring Highly Skilled Personnel,
Training, Special Compensation
Plans

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 YIELD RATIO

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 YIELD RATIO

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

Interview 100 : 50
yR = 2 : 1

Tested : 200 : 100

yR = 2 : 1

Short listed 2000 : 200

yR = 10 : 1

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 Table 10.4: Hypothetical Yield Ratio for Five Different Recruitment Sources
Local Renowned Employee Newspaper Executive Search
University University Referrals Ad Firms
Resumes
200 400 50 500 20
generated
Interview offers
175 100 45 400 20
accepted
Yield ratio 87% 25% 90% 80% 100%
Judged
100 95 40 50 19
acceptable
Yield ratio 57% 95% 89% 12% 95%
Accept
employment 90 10 35 25 15
offers
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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 JOB
SATISFACTION
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 THE WORK

PROCEDURAL TECHNICAL
ASPECTS ASPECTS
Task variety
Feedback Autonomy
Clarity and
m
meeaan
niin
nggfful
ulness of Aspirations Self-concept

INDIVIDUAL
EXPECTATIONS

goals Self-esteem and efficacy

Organization Satisfaction and Skill

IDUALS’
JOB
variety
Department\
Achievement and

S’ NEEDS
Boss FORMAL INFORMAL utilization
Structural Social contacts
Design Peer group
Quality of management

RELATIONSHIPS

Job design-a more holistic approach

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 CORE DIMENSIONS OF THE JOB
Critical Psychological
Core Job Dimensions Personal and Work
State
Out comes

Skill variety
Experienced
meaningfulness of the
Task identity
work
Task significance High internal work
motivation

High-quality work
performance
Experienced
Autonomy responsibility for
High satisfaction with
outcomes of the work
the work

Knowledge of the
Feedback actual results of the Low absenteeism and
work activities staff turnover
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 MANPOWER
PLANNING
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 TRANSITION MATRIX (MARKOV
ANALYSIS)

1997

1995 Clerk I Clerk II

Clerk I 80% (s)

Clerk I I 60% (s)

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 TRANSITION MATRIX (MARKOV
ANALYSIS)

1997
1995 Clerk I Clerk II Left Total
Organization
Clerk I 80% stayed 10% 10% 100%
promoted
Clerk I I 10% 60% (s) 30% 100%
demoted

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 MARKOV ANALYSIS
CATEGORY 4 3 2 1 EXIT
GRADE-4 .7 .1 0 0 .2
GRADE-3 .05 .8 .1 0 .05
GRADE-2 0 .1 .75 .05 .1
GRADE-1 0 0 .05 .9 .05
STAFFING
250 120 40 20 0
REQUIREMENT
GRADE-4 175 25 0 0 50
GRADE-3 6 96 12 0 6
GRADE-2 0 4 30 2 4

GRADE-1 0 0 1 18

TOTAL 181 125 43 20 61

VACANT
69 +5 +3 0
POSITIONS
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A HYPOTHETICAL TRANSITIONAL MATRIX
FOR AN AUTO PARTS MANUFACTURER
1996
1993
(1) (2) (3) (4) (5) (6) (7) (8)
1. Sales manager .95 .05

2. Sales .05 .60 .35

representative
3. Sales apprentice .20 .50 .30

4. Assistant plant .90 .05 .05

manager
5. Production .10 .75 .15
manager
6. Production .10 .80 .10
assembler
7. Clerical .70 .30
8..Not in .00 .20 .50 .00 .10 .20 .30
organization
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 BOWEY TURNOVER INDEX

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

to industry.

Formula:1) Sum of month served by staff currently employed X 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 X 24 = 120 20 X 24 months : 480 (2)
5 X 12 = 60
10 X 6 = 60
240 (1)
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 OPTIONS FOR REDUCING AN
EXPECTED LABOR SURPLUS
Option Speed Human Suffering
Downsizing Fast High

Pay reductions Fast High

Demotions Fast High

Transfers Fast Moderate

Work sharing Fast Moderate
Retirement Slow Low
Natural attrition Slow Low
Retraining Slow Low
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OPTIONS FOR AVOIDING AN EXPECTED
LABOR SHORTAGE
Option Speed Human Suffering

Overtime Fast High

Temporary Fast High

employees
Outsourcing Fast High

Retrained Transfers Slow High

Turnover reductions Slow Moderate
New external hires Slow Low
Technological Slow Low
innovation
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 TABLE 24.1: SURVIVAL RATE ANALYSIS
Entry Cohort Original Number surviving to end of year after engagement
strength
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
Average
survival rate 100% 83% 71% 62% 55% 50%

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 PROGRAMME PLANNING OPTIONS

Hire new full-time employees

Offer incentives for postponing retirement
Re-hire retired employees on part-time basis
If a shortage of Attempt to reduce turnover
employees is expected Bring in overtime for present staff
…. Subcontract work to another company
Hire temporary employees
Re-engineer to reduce needs.

Do not replace employees who leave

Offer incentives for early retirement
Transfer or re-assign excess employees
If a surplus of employees Use slack time for employees training or
is expected …. equipment maintenance
Reduce work hours
Lay-off employees

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 HR AUDIT

 Debate still in infancy

 Efficient and economic use of resources
 Increased attention to contribution of
employees
 Wastage and attrition cost
 Job satisfaction of employees

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 SEPARATION COSTS

1.Exit interview = cost for salary and

benefits of both interviewer and
departing employee during the exit
interview.

2. Administrative and record keeping

action
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 REPLACEMENT COSTS

1 Advertising for job opening.

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

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 TRAINING COSTS

1 Booklets, manuals and reports.

2 Training & Education
3 Trainer Cost
4 Salary and benefits of a new employee
during training

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 SOURCE COST PER RECRUIT

SC/R =AC = AF + NC / R
Where
AC = advertising costs, total monthly
expenditure
AF=agency fees, total for the month
NC=no-cost applicants, walk-in, non
profit agencies etc
R=total recruits

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 COSTING EMPLOYEE BEHAVIORS

Payout (Costs
Effect
Probability Saved)
Payoff, Option 1(Raisewages) $5,000 x .60 = $3,000
Payoff, Option 2 (Career
tracks)
3,000 x .20 = 600

Payoff, Option 3 (Benefits

package)
2,000 x .10 = 200

Payoff, Option 4 (Flexible

hours)
1,500 x .10 = 150
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 COSTING EMPLOYEE BEHAVIORS

Annual Payout Cost /

Option Annual Cost
(Benefit) Benefit Ratio
1 $10,000 $3,000 .30
2 5,000 600 .12
3 4,000 200 .05
4 3,000 150 .05

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 COMMENTS
ENCOURAGED

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 CONCLUSION

When an archer misses the mark,

he turns and looks for the fault
within himself. Failure to hit the
bull’s eye is never the fault of the
target. To improve
12/08/21 08:39
your aim-
IBP PRESENTATION 43

improve yourself.