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CASE STUDY: WORKER PRODUCTIVITY AMONG GIANT U.

S CORPORATIONS

Submitted by:

MANUEL LUIS G. OGUES

Submitted to:

BR. ERNESTO QUIDET JR.

August 31, 2018


I. EXECUTIVE SUMMARY

Worker productivity is said to be synonymous to the rate at which employees perform


their best significant to the organizational success is measured by revenue and profit for
employee. It is said that employees enter into a firm or an organization, bringing with them skills
and value they have learned either in school or from their previous workplace, but the firm must
be able to assess their productivity through an assessment or evaluation process wherein, it is
determined what trainings and enhancement procedure must these employees undergo in order
for them to meet the or be aligned with organizational goals and objectives.

As such, a complete and cohesive understanding and analysis of how each employee is
able to contribute to the firm’s goal and objectives, is needed to identify and modify prevailing
scenarios relevant to workers productivity in the present business environment. By delving into
defining productivity, how is it increased and measured, one can arrive at a decision as to how
worker productivity may be achieved and sustained

II. STATEMENT OF THE PROBLEM

Since high profit margin and return on equity (ROE) are not foolproof means of
measuring corporate performance, it is notably obvious that traditional means of measuring
corporate profit should add efficient use of human resource as an additional factor in achieving
the purpose.

Moreover, the firm must be able to answer the following:


*What is employee productivity and how is it measured and predicted?

*What is the relationship between employee productivity versus revenue and profit per
employee?

*What are the firm-specific and industry-specific factors affecting work productivity?
III. DATA ANALYSIS

Building the Regression Model

Variables. The case provides five potential variables to construct a regression model to
predict worker productivity among giant U.S. corporations: number of employees, income per
employee, industry average income per employee, revenue per employee and total assets per
employee. To predict employee productivity, this model will use Income per Employee as its
dependent variable. Lacking the number of man hours to determine worker productivity, and
based on the research cited above in terms of productivity definitions, the best measurement that
can be determined or predicted from the variables given is the total amount of income generated
from the other variables.

The independent variables the model will use to predict the Income per employee are
both the revenue per Employee and Total Assets per Employee. Revenue per Employee is
justified as an Independent Variable because the amount of revenue an employee generates will
have a direct effect on the company profit any employee generates. Total Assets per Employee is
also justified because assets are the tools an employee uses to generate the revenue. Whether
these tools include industrial machinery or sophisticated email mailing list software using
algorithms the assets available to employees are used directly or indirectly to generate revenue. I
am excluding the other two variables from the regression model: Number of employees and
Industry Average Income per Employee. The Number of Employees is already accounted for
because the two independent variables used in the model are expressed in terms of the number of
employees as a ratio.

The Industry Average Income per Employee is not relevant to the model because it is not
a predictor of income per employee or productivity, but rather it is descriptive of the industry. Its
use is appropriate for benchmarking and not predicting. For example, if a company wanted to
know how productive their employees were relative to a more successful or less successful
company in the same industry, the industry average would provide a means of comparison.

Therefore, the model I have constructed to predict worker productivity is below. Income
per Employee = b0 + b1*Revenue per Employee + b2*Total Assets per Employee Linearity. I
would expect both variables to have a positive effect on the dependent variable. In normal
operation, as revenue goes up for a company, income should also go up for a company, barring
any catastrophic incident or unexpected cost, such as a massive product liability punitive
damages award. Additionally, as assets of the company increase, income should also go up. For
example, one delivery van might enable a small business to make ten deliveries on sales a day.
However, two delivery vans might enable that same small business to make twenty deliveries a
day. If more deliveries can be made, more revenue can be generated.

Likewise, two assembly lines can produce more cars than one assembly line. There are
many types of assets a company can own, but as long as the number and quality (such as the
latest technology) of the assets grows and the number of skilled employees to make efficient use
of the assets increases, total assets should have a positive impact on total income. I would also
expect the model to be linear rather than non-linear for the reasons given by the examples above.
Revenue and Assets both have incremental effects on income. They do not result in exponential
effects in income. For example, two delivery vans might make twenty daily deliveries possible.
Three delivery vans would make thirty deliveries a day possible, not ninety. Likewise, the
addition of an assembly line might double manufacturing capacity. It wouldn’t quadruple
manufacturing capacity, all other factors relating to the assembly line being equal.
Running the regression using the above model results in the following output:
t stats.

H0: bi = 0

Ha: bi ≠ 0

At alpha = .05 and 27 degrees of freedom with a sample size of thirty, the t value is

±2.052. When the t stats for the independent variables are compared to the critical t value, the

null hypothesis for R is rejected because the t stat of 10.23764 falls outside the acceptable range

of ±2.052. Therefore a linear relationship exists for the R variable. However, there is

insufficient evidence to reject the null hypothesis for A because the t stat of 1.140525 falls within

the acceptable range of ±2.052. Therefore, a linear relationship does not exist for the A variable.

When the t stat for the constant is compared to the critical t value, there is insufficient

evidence to reject the null hypothesis because the t stat of 1.30307 falls within the acceptable

range of ±2.052.

R2

. R2 is the coefficient of determination and describes the proportion of variability of

the dependent variable (I) accounted for by the independent variables R and A. Given an R2

value of .87534, it can be said that 87.534% of the variability in I can be explained by the
independent variables in this regression model.

F Test.

Ho: Coefficients of all the independent variables = 0

Ha: Ho is not true

To test the significance of the regression model as a whole, we look at the F Test value.
The F Test has a value of 94.79457, which is greater than F (2, 27) critical value of 3.35. This

means the null hypothesis is rejected and we conclude that we are 95% confident there is a linear

relationship between at least one of the independent variables and the dependent variable.
IV. DECISION CRITERA AND ALTERNATIVE SOLUTIONS

Based on the analysis, the manager or key persons may create criteria against which
they will evaluate primary and alternative solutions.

 Systems for Work Productivity


 Metrics for Work Productivity
 Strategies for Sustaining Work

ALTERNATIVE SOLUTIONS:

Organizational goals and objectives must be relayed clearly and be thoroughly comprehended by
employees so that these will be achieved and sustained by the firm through time; after all, it is
essential for any organization to exist and flourish.

In line with this is the reality that the firm must recognize how important human resource is for
the purpose of measuring the overall performance.

After the said issue is addressed and identified, the firm may be able to measure and perhaps,
even predict worker productivity.

In addition, after worker productivity is measured and predicted the firm must create a cohesive
and relevant list of activities and programs intended to sustain worker productivity. Trainings,
seminars and development programs may now be drafted, discussed, evaluated, implemented,
and re-evaluated to ensure that worker productivity, as an important indicator in measuring
corporate performance, is not only measured, predicted, and achieved – but more importantly, it
is sustained.
V. RECOMMENDATION /ACTION PLAN

To measure employee or worker productivity, it must first define. Interestingly, it is


anchored upon capable and well- motivated employees who figure at the center of
how revenue and profit per employee and calculated.

To achieve this, employees must be rewarded with benefits, such as:


 Tuition reimbursement
 Flexible working hours and work – life balance
 Freedom to use social media at work
 Compensation that is just and equitable
 Effective utilization of health and wellness programs
 Organizational structure, where there is internal alignment of the company’s
strategic vision with its organizational structure at all levels of the firm
 Clear communication to all employees
 Adoption of best management or quality practices, like Total Quality
Management (TQM)

To predict employee or worker productivity, the firm can use income per Employee as its
dependent variable and both the Revenue per Employee and Total Assets per Employee as the
independent variables. These two independent variables justified because the former have a
direct effect on the company profit and the latter refers to the tools and equipments used by
workers to generate revenue, directly and indirectly. Determining the relationship between these
variables will help the firm predict worker productivity.

To sustain worker productivity, the firm must adheres to management practices and strategies
designed to improve and increase job satisfaction of workers. Human resource or capital is the
best competitive advantage any company can have and as such, it must be given consideration.
VI. CONCLUSION

Measuring corporate performance is important because through this, firms are able to assess how
they ought to perform if success is their goal and similarly, it allows them to heck and caused
mistakes. In relation to this, traditional means of measuring corporate performance which is
focused on maintain high profit margin and return on equity, has been proven to be an
inadequate means of doing so.

This is primarily attributed to its failure to include effective use of human resource as an
invaluable indicator for measuring corporate performance. Relatively, it has failed to recognize
or identify worker productivity, how is if measured, predicted and sustained.

More importantly, it is necessary to identify firm-specific and industry-specific factors relevant


to explaining differences among giant corporations in the amount of revenue and profit per
employee which directly affects company profit. There is a direct relationship between the two.
As revenue and profit per employee increases, so does the company profit.

Firm-specific factors which can explain differences in employee or worker productivity include:

 Technology
 Geographic Location
 Company Culture

Industry-specific factors include:


 Type of work
 Presence of Unions

These factors are relevant in the sense that they help define and dictate differences among
different corporations in terms of corporate success as determined by performance.
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VII. APPENDIXES