Reference no: EM131466685

Question: The Board of Directors of the company, having the hierarchy structure, was disheartened at the revelation that 50% of its employees at upper levels of management were incompetent. The Board therefore engaged the services of two management consulting firms to seek advice on how to improve the situation. One firm suggested that the promotion policies be tightened up to avoid promoting incompetents. They outlined a program of regular interviews, testing, and peer evaluation that they claimed would screen out essentially all incompetents from promotion. (In our terms this proposal would change P by replacing the element in the lower right corner by zero.)

The second consulting firm suggested that the screening was already adequate, but that what was required was the initiation of employee training. They outlined a program of motivation enhancement, internal courses, and so forth. They estimated that, with a modest effort, they could increase the number of incompetents who become competent at their job over a one-year period from the present rate of one out of eight to a rate of two out of eight. They argued that such a program would significantly affect the quality of the upper levels. If both proposals were about equally costly to implement, which should the Board select? Will either plan drastically affect the ratio of the number of people at successive levels (near the top)?