Reference no: EM132448483

The CEO of Ras Al Khor incorporated has recently gathered a lot of heat due to a radical corporate restructuring and downsizing strategy. Over a period of 2 months, the firm laid off over 275 full time employees. While the HR department maintains that the severance packages are based on employee's length of service and monthly salary, several employees have complained that they have been treated unfairly.

The board of directors have appointed a legal research team to look into this matter which is responsible for determining the mechanism through which employee compensation for terminated employees was calculated and to establish if there were any instances of discrimination in the way the restructuring efforts were carried out.

Problem 1

P1. What is the aim of this research?

Problem 2

Company policy specifies that each employee's severance should be determined by three factors: employee absences, length of service with the company, and monthly salary.

P2. Identify the independent and dependent variables.

Problem 3

The research team has used company data to develop the following correlation matrix.

Table 1: Correlation Analysis
	Employee Absences	Length of Service	Monthly Salary	Employee Severance
Employee Absences	1
Length of Service	0.56	1
Monthly Salary	0.02	0.17	1
Employee Severance	-0.75	0.43	0.82	1

P3. Evaluate the relationship between the key variables.

Problem 4

Results of multiple linear regression are provided below:

Table 2: Multiple Linear Regression: Summary Output
	Coefficients
Intercept	-0.43
Employee Absences	-3.23
Length of Service	0.25
Monthly Salary	7.45

P4. Use this information to develop and interpret a regression equation.

Problem 5

Alia Al Ketbi, one of the employees that got terminated, was awarded a severance of AED 60 thousand. She has been working with the company for 9 years, received a monthly salary of AED 12 thousand, and had a total of 3 absences in her record.

P5. Use the regression model to determine if her severance package was fair.

Problem 6

Results of the three goodness of test measures are given in the table below:

Table 3: Goodness of Fit Tests
R Square	0.42		ANOVA	F	Sig F
				15.49	0.013
	Coefficients	St.Error	t Stat	P-value
Intercept	-0.43	0.53	-1.2	0.2312
Employee Absences	-3.23	0.09	4.6	.00001
Length of Service	0.25	0.14	0.2	0.5842
Monthly Salary	7.45	0.12	-3.1	0.0021

P6. Use this table to comment on the goodness (quality) of the regression model.

Problem 7

The research team has also compared number of terminations across the three branches of the organization. The results are summarized in the following table:

Table 4: Anova: Single Factor                                                                                  (Alpha 0.05)
Groups	Count	Sum	Average	Variance
Ras Al Khor Abu Dhabi	15	119	7.9	0.23
Ras Al Khor Dubai	15	92	6.1	0.15
Ras Al Khor Sharjah	15	67	4.5	0.20
ANOVA
Source of Variation	SS	df	MS	F	P-value	F crit
Between Groups	0.25	2	0.125	4.409	0.021	3.23
Within Groups	40.97	42	0.278
Total	41.22	44

P7. What conclusions can be drawn from the results presented here?

Problem 8

The following table summarizes the results of a t-test for differences.

Table 5: t-Test - Severance Amount                                           (Alpha 0.05)
	Male	Female
Mean	79,654	65,432
Variance	0.35	0.21
Observations	100	150
t Stat	1.77
P(T<=t) two-tail	0.09
t Critical two-tail	2.08

P8. What hypothesis is being tested in Table 5? Interpret the results of the t test.

Problem 9

P9. Based on the findings of this research, what insight would you provide to the board of directors?