Assa Birati

Assessing employee turnover costs: A revised approach.

Abstract An amended version of Cascios (1991) computational formula applied to dysfunctional turnover in organizations not only illustrates the high cost of turnover, but also strengthens the conviction that general accounting approaches can be successfully applied to the assessment of the economic consequences of a variety of employee behaviors. This technique could be critically important for that relatively neglected area of human resource management.

Assessing the Costs of Behavioral and Psychological Withdrawal: A New Model and an Empirical Illustration

Ce travail sur la desimplication des salaries propose un modele qui integre les dimensions financiere et comportementale et fait appel a des formules mathematiques qui fournissent une estimation du cout global de la desimplication pour l’entreprise. Pour nous differencier des tentatives anterieures de calcul d’un tel cout, nous avons essaye d’englober toute une serie de comportements et d’attitudes de retrait, incluant le retrait psychologique, le freinage, les retards, absences et demissions. L’estimation du cout prend en compte des elements directs et indirects, certains d’entre eux etant meme traditionnellement consideres comme ne relevant pas de l’economie. Les equations reposent sur le fond theorique empruntea la litterature sur le comportement comprenant l’etablissement des normes, les interactions a l’interieur de l’equipe de travail et l’eventuelle derive d’attitudes et de comportements de retrait relativement discrets vers des formes plus accentuees. On utilise dans les equations des correlations (corrigees empiriquement) entre les differentes formes de retrait. Ce modele a ete exploite pour evaluer les couts de la desimplication pour l’annee fiscale 1997 dans une societe israelienne de dimension moyenne leader dans le domaine de la haute technologic. Il est apparu que le cout de la desimplication etait approximativement de 2,8 millions de dollars americains, ou encore de 16,5% du benefice avant impots de l’entreprise. On discute aussi des consequences theoriques et pratiques de ces resultats. The present study proposes an integrative behavioral-financial model of employee withdrawal combined with mathematical formulas, allowing the estimation of the overall cost of withdrawal to the firm. In contrast to previous attempts to calculate such a cost, we aimed to cover an entire range of withdrawal attitudes and behaviors, including psychological withdrawal, withholding effort at work, lateness, absence, and turnover. Cost calculation involves direct and indirect components, including those that were traditionally considered non-economic. The equations are based on theoretical grounds of the behavioral literature, including norm determination, mutual interpersonal influences within the work teams, and the possible progression of relatively mild withdrawal attitudes and behaviors into more severe forms. Empirical mean corrected correlations between withdrawal forms are used in the equations. We applied the model by assessing the withdrawal costs for the fiscal year 1997 in a leading, medium-sized, Israeli high-tech company. It was found that the withdrawal cost was approximately 2.8 million US dollars, or 16.5 per cent of the company’s before-tax income. Theoretical and applied implications of the results are discussed.

Economic Utility of Training Programs

In economic terms, training projects represent a major outlay for many corporations. In spite of the growing need to evaluate the cost-effectiveness of training programs in organizations, such cost-benefit analyses are rarely conducted. Moreover, the extant conceptual approaches and mathematical formulas typically used for this purpose produce inaccurate estimates of the economic utility of training programs for organizations.An amended approach to this procedure is elaborated and its benefits demonstrated. The proposed model regards any potential plan as an investment project that should be evaluated in a similar way to the assessment of other investment options. Thus, it is recommended that a training project be considered only if its potential real, post-tax rate of return exceeds the real, post-tax cost of capital to the firm, subject to the unique features of investment in human capital. This process could improve the potential financial benefits to the firm, from investment in training.

Cost-Benefit Analysis of Organizational Interventions: The Case of Downsizing

This article advocates a new approach to assessing the desirability of downsizing. The model treats downsizing programs the same as any other projected investment by a firm. The steps involved in reaching a decision include: (a) Estimation of cash outflows at the initial stage of the process regarded in this paper as the investment in the downsizing project; (b) Assessment of the net inflow from downsizing; (c) Estimation, on the basis of (a) and (b), the real, post-tax rate of return on the downsizing plan and comparison with the real, post-tax cost of capital to the firm; (d) Ranking and comparing the downsizing project to all other potential investments. The final decision of whether to accept or reject a downsizing plan will then depend on the relative desirability of the project (when all other non-quantitative considerations are also evaluated) to other investment alternatives, taking into consideration the limited resources of the firm for capital spending.

Withdrawal behavior and withholding efforts at work (WBWEW): Assessing the financial cost

Abstract In the continuing effort to confront the loss of profitability to industry as a result of withdrawal behavior and withholding efforts at work, this article presents an advanced and improved formula for estimating both the direct and indirect costs to a company resulting from this errant behavior. The emphasis is on a quantitative approach that incorporates the added value of forgone revenue rather than merely the cost of payments to the absentees as in earlier quantifications.

The redistributive effects of inflation and of the introduction of a real tax system in the U.S. bond market

Abstract This paper investigates which types of borrowers and lenders in the U.S. bond market gain (or lose) as result of the interaction of inflation with a nominal and discriminating tax structure. It is shown that an increase in the rate of inflation favors tax exempt institutions, and probably other lenders too. Corporate borrowers probably gain while mortage borrowers probably lose. The paper also investigates the one shot redistributive effects of indexing the tax structure. It is shown that the reform hurts tax exempt institutional investors and, probably, other lenders too. It hurts corporate borrowers and probably favors state and local governments and mortgage borrowers.

Pension funds saving individuation

This paper considers a pension insurance problem using an intertemporal framework. We assume a deterministic framework in order to obtain tractable and yet revealing results regarding the propensity to save for retirement. The essential conclusions of this paper include a condition for a single switch, that is, when the saver will decide the switching time, prior to retirement, to start saving. Because of the linear objective used in this paper, saving rates were found to be of the bang-bang type. In addition, we show that the tax effects are important. The richer the saver, the greater the tax advantages for pension savings.