Case Study Scenario:
You’re a consultant for GlobaTech, a relatively large technology
company with $800 million a year in revenue and 1,233 employees.
Recently many of their employees have left the company. Job
attrition is costly for the company. The hiring, training, and
integration of each new person costs money, not to mention the work
lost during the search process. You are asked to help GlobaTech in
identifying important areas for improvement with respect to
employee retention.
1) GlobaTech believes that they should start
offering end-of-year bonuses that cost a total of $780,000. The
hope is that this investment will increase their yearly retention
rate. Each additional employee that is retained yields the company
an average of $2,400. Suppose the effectiveness of the program is a
function of the economic climate in the next year. The economy can
be weak or strong. GlobaTech believes that the bonuses will
increase retention by 10% in a weak economy and 4% in a strong
economy. They have estimated the probability of a declining economy
at 25% and an expanding economy at 75%. What decision should the
company make in order to maximize profits? What is the expected
monetary value of this decision? Show your work.
2) GlobaTech had to lay off hundreds of employees
last summer and they think that this past event is influencing
employees’ judgements about their current job security. You test
this theory by surveying their employees and asking them to report
their perceived likelihood of being laid off this year. The average
response is 40%. GlobaTech reports to you that the actual
likelihood of layoffs this year is 10% based on current revenues.
What is the availability heuristic, and how can it explain the
biased judgements of the employees?
Case Study Scenario: You’re a consultant for GlobaTech, a relatively large technology company with $800 million a year in revenue and 1,233 employees. Recently many of their employees have left the co...
You’re a consultant for GlobaTech, a relatively large technology company with $800 million a year in revenue and 1,233 employees. Recently many of their employees have left the company. Job attrition is costly for the company. The hiring, training, and integration of each new person costs money, not to mention the work lost during the search process. You are asked to help GlobaTech in identifying important areas for improvement with respect to employee retention. 1. GlobaTech believes that they should...
Case: Enron: Questionable Accounting Leads to CollapseIntroductionOnce upon a time, there was a gleaming office tower in Houston, Texas. In front of that gleaming tower was a giant “E,” slowly revolving, flashing in the hot Texas sun. But in 2001, the Enron Corporation, which once ranked among the top Fortune 500 companies, would collapse under a mountain of debt that had been concealed through a complex scheme of off-balance-sheet partnerships. Forced to declare bankruptcy, the energy firm laid off 4,000...
CASE 20 Enron: Not Accounting for the Future* INTRODUCTION Once upon a time, there was a gleaming office tower in Houston, Texas. In front of that gleaming tower was a giant "E" slowly revolving, flashing in the hot Texas sun. But in 2001, the Enron Corporation, which once ranked among the top Fortune 500 companies, would collapse under a mountain of debt that had been concealed through a complex scheme of off-balance-sheet partnerships. Forced to declare bankruptcy, the energy firm...