Dear Students,
Case reports are a great practice for the real business world—taking a problem and not only solving it, but defending your solutions and recommendations. Some guidelines for Homework2:
- Plan your presentation as though I am the CEO and you are the consultants I hired to investigate the issue. Pretend that Sally and am very concerned about this potential discriminatory pay problem in my company. I also am not a statistician, but am analytical and very smart; therefore, I will understand the details of how you arrived at your conclusion.
- Submit your report in MSWORD format.
- As part of your analysis, you should complete the following tasks:
| Identified the analysis questions |
| Converted analysis questions into statistical questions/Analytical procedure |
| Performed appropriate descriptive statistics |
| Discussed, recorded handling of unusual data |
| Applied formal analysis procedures (using regression analysis and tools we learned this semester in Excel and R) |
| Developed conclusion |
| Discussed of Outcome/Future |
| Attached supporting Graphs and Charts |
Data: Homework2_Case
Case: next page
PRODUCTIONSYSTEMSINC.
DevelopmentofaSalaryModel
- INTRODUCTION
Sally Parsons, president of Production Systems Inc., hasasked you toassist in analyzing thecompany’s salary data.Shehas recently received a seriesof complaintsthatwomenemployeesarereceivinglowerwagesforcomparable jobs. Thecomplaints came as a surprise toSally because she thought salary increases were based on experience and performance. Sally was aware that the average wages of women staff were less overall than those of men. However,shealsoknewthatwomenstaffhadlessexperienceandthuswould be expected to have lower wages. Given the complaints Sally understands that she must have objective information.
Production Systems Inc. is a regional computer systems development company that specializes in work with banks and insurancecompanies. The company started asa servicedepartment for aregional accounting company inthe1960s.Afewof thecurrentemployeesactually camefromtheaccount ing company. In the early 1970s, Production Systems Inc. became an inde pendent company. The company has been quite successful, experiencing steady growth over its entire life. Employment has not grown as rapidly as have the company’s total billings because of productivity innovations intro duced during the past ten years.
The company has tended to hire experienced professionals with masters degrees in technical fields including business, management science, com puter science, engineering, economics, and mathematics. Most of the employeeshavecomewithsignificantexperience.Theyoungestemployeein the professional group is 29, and the most senior is 65. Experience with Production Systems varies over a wide range, with one-fourth having less than seven years and one-fourth having more than 22 years. Most of the women employees have less experience with the company.
Theprofessionalstaffhasonly threelevels:systemsanalyst,teamsystems analyst,andprojectsystemsan’alyst.Salaryrangesarequitewidewithineach of the levels. Project systems analyst is thehighest level, followed by team systemsanalyst. Promotion tothehigher ranksisawarded byacommittee of
12S
126CASE25 ProductionSystemsInc.
project systems analysts, and advancement to each level usually requires a minimum of six years’ experience and significant project work. In general, persons at the higher levels are more productive and tend to direct projects.Itis possible, however,foragroupthatincludes several projectsystems ana lysts to be directed by a team systems analyst. Forevery project under con tract, a team ofthe bestavailablepeople is createdtocarry out thework. It isalsowell known that somepersons atthehighest level areless productive than othersatlower levels. Thus higher status and salary isareward forpast performance and not a reliable measure of present contribution.
Salary adjustments are sometimes made to recognize certain specialty skills that demand a high price in the labor market. Persons who work in databasesystems programming have unique skills that arehighly sought by other companies. Another special category is technical systems developers people who prepare specialized high-performancesoftware for key parts of largesystems. People with either of theseskills arein great demand, sothey must be paid a premium if they are to be retained. Such specialistswork at all three professional staff levels, depending on their experience with the company,butthecompanyhasnotprovided premiumsalariesmerelybypro moting thespecialists. The personnel policy has beentobasepromotions on a wide rangeof workand project management skills.Specialskillsarecom pensated by a separate adjustment. Because promotions tohigher levels are related toexperience, thecompany hassought toavoid confusing levels and specializedskills that have a market premium.
- PROBLEMANALYSIS
Your project analysis begins with a series of meeting you have with Sally Parsons and the director of human resources, Gilbert Chatfield. Both Sally and Gilbert indicate that wages tend toincrease with experience in thecom pany.The managersconduct anannual employee review, which reliesheav ily on input from project leaders who are directing teams at various remote locations. Project leaders shift as projects arecompleted and new teams are assigned. Thus, obtaining consistent informationto provide the basis for a high-quality employee evaluation is difficult. Most of the employees at Production Systems enjoy their independence and challenging work; salary levelshavenotbeenamajorconcernformostemployees. Certainpeopleare recognized asstrongperformers, and theirincreasesand promotions aregen erally accepted by the professional staff.
Inrecent years, however, concerns havebeen raised about thefairness of thesystem of awarding salary increases. The complaint by women employ ees is the most serious,but other complaintshavebeen made over the past
CASE25 ProductionSystemsInc. 127
|
VARIABLENUMBER |
VARIABLENAME |
NUMBER OFOBSERVATIONS |
VARIABLEDESCRIPTIONS |
| 1 | Age | 150 | Ageoftheemployee |
| 2 | Yearsexp | 150 | YearsofexperiencewithProductionSystems |
| 3 | Yearslv2 | 150 | Numberofyearsasateamsystemsanalyst |
| 4 | Yearslv3 | 150 | Numberofyearsasaprojectsystemsanalyst |
| 5 | Gender | 150 | Gender |
| 6 | Salary | 150 | Annualsalary(indollars) |
| 7 | Speclty1 | 150 | Specialty: 1=Databasesystemsdevelopmentskill;0=else |
| 8 | Speclty2 | 150 | Specialty:1=Technicalsystems developmentskill;0=else |
several years. In view of these concerns, you recommend that a salary pre diction model bedeveloped. Thismodel would usedatabased onthecurrent salaries paid to professional staff and important variables that define the experienceandskilllevelsofthestaff.Suchamodelwouldindicatetheeffect ofvariousfactorsthatcontributetosalarylevel,anditwouldidentify persons whosesalaries areabove and below thepredicted average salary.Themodel could also be used to determine whether an employee’s gender predicts a salary that ishigher or lower than would beexpected on the basis ofexperi ence and qualifications.
After some discussion, Sally and Gilbert agree that this model should be developed. It would be useful for answering the present complaint, and it would provide a tool for reviewing the complete professional staff salary structure. After reviewing theemployee data records, you select acandidate set of variables for the model development. These variables, which arecon tained in a file named Prodsys, are described in Table 25.1. To protect the confidentialityofeach employee’s salary record, thereisno variable toidentifyindividual employeesinthisfile.Atthecompletion ofthestudy, youwill provideGilbertwithalistofemployees whoaresubstantiallybeloworabove the standard predicted by the model. Since he has the identification key for each employee and has access to other performance information, he can decide whether certain persons’ salaries should actually be above or below the standard.
