HARVARD BUSINESS REVIEW

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP86-00024R000100090007-4
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 14
• Document Creation Date: December 12, 2016
• Document Release Date: March 25, 2002
• Sequence Number: 7
• Publication Date: September 3, 1975
• Content Type: FORM

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STAT
AUTHOR/ORIGINATING AGENCY AND POST
PURCHASE. ORDER NO.
RETENTION'
PURCHASE.APPROVAL_' AUTHORIZED HY
COST CENTER - - '
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Logan M. Cheek
STAT
Cost effectiveness comes to
the personnel function
Introducing systematic project evaluation in
the personnel department is one
company's answer to the productivity problem
Foreword
The combined impact of the recent economic reces-
sion and increased worker alienation has intensified
top executives' efforts to bolster manpower produc-
tivity. In most organizations where manpower is the
largest cost element, productivity increases resulting
from more effective and relevant personnel action pro-
grams can have significant impact on revenue and
profits. Yet the personnel department, while most di-
rectly involved with such efforts, is too often stymied
in undertaking them, either because of inadequate
staff, inability to channel its resources toward the
most desirable undertakings, or inability to gain top
managerne- commitment. As a result, argues this
author, key profit opportunities are lost. Capitalizing
on such opportunities, he maintains, requires that
decision makers continually answer this important
question: "How can we best allocate our scarce re-
sources toward the most cost-effective undertakings?"
The Xerox Corporation has developed an approach
Business and government leaders are increas-
ingly concerned over what has come to be called
the "productivity crisis." A host of economic ills
are ascribed to it-squeezed profit margins, mod-
erating revenue growth, inflation, economic slug-
gishness, and the evaporation of the U.S. bal-
ance-of-trade surplus. Moreover, some disturb-
ing figures underscore this concern:
that permits management to objectively resolve this
issue and, in so doing, to weed out marginal efforts
while concentrating on those that are necessary or
desirable. The technique, first successfully utilized in
late 1971 in developing the company's long-range
manpower strategy, was subsequently used to develi';
operating budgets for selected personnel units through-
out the organization.
Mr. Cheek is currently Manager, Plans, Control
and Analysis, for Xerox's Information Systems Grout
in Rochester, New York. He is responsible for his organization's budget and long-range plans. In addition
he is a Director of Cositronics Industries and Chair-
man of the Finance Committee of Adamson Invet.t'
ments. He was formerly associated with McKinsey
Company, Inc., and consulted with several large multi-
national companies, in both the Uni,ed States ana
Europe, primarily on the design and im )lementation
of planning and control systems.
0 After averaging gains of 3 41 a year between
1950 and 1965, the U.S. productivity growth rate
dropped to a 2.1Y% annual average between 19(':
and 1970. Had the latter rate prevailed during
the entire postwar period, the improvement i.:
U.S. living standards would have been reduced
by 30Jo.
0 While the 1971 productivity rate jumper!
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Cost effectiveness for personnel
sharply by about 4%, this recovery-year improve-
ment compares unfavorably with the 4.5% gain
of 1955 and the 4.7% gain of 1962.
0 For the long term, a well-publicized Bureau
of Labor Statistics estimate forecasts a net po-
tential decline of 0.2/o in the rate. Translated
into dollars, this could represent a $12o billion
reduction of economic output in the 1970's.
Aware of the need for a substantial increase in
productivity growth rates, business and labor
leaders have been turning with increasing fre-
quency to such techniques as job enrichment
and redesign, group incentive pay plans, man-
pnwer planning for adjustment and upward mo-
bility, and joint, labor-management productivity
teams at the plant level.
Clearly, the primary responsibility for devel-
oping such manpower-related programs falls
within the charter of the personnel department.
Yet, while many techniques are being imple-
mented, the overall effort to improve productiv-
ity in most companies appears to be only mar-
ginally successful. More often than not, this
lack of success can be attributed to the person-
nel department itself, for these reasons:
^ In a given year, a number of proposals
emanate from such varied personnel functions
as employment, compensation, training, plan-
ning, and systems. At the same time, any num-
ber of outside consultants' recommendations
may have to be evaluated. Unless these proposals
are rigorously scrutinized, many programs hav-
ing only a marginal impact on productivity may
be selected. As a result, the staff becomes
stretched, profits suffer, and the long-term effect
is a_personnel function focused on activity rather
than results.
^ Because of the impact of behavioral sci-
ence, personnel departments have moved in-
creasingly in recent years into such complex and
sophisticated areas as job enrichment, selection
research, assessment centers, and executive ca-
reer planning and development. Consequently,
the problem of managing the personnel function
has been compounded. Indeed, one might say
that the sophistication of personnel programs
has increased arithmetically, while the com-
plexity of choosing the best ones and managing
them has increased geometrically.
^ While all personnel costs are direct and vis-
ible, most benefits derived from their effective
operation are indirect and often intangible. For
example, the linkage between improved profits
and the costs of undertaking a comprehensive
clerical job enrichment effort is elusive at best.
Because of this difficulty, personnel is one of the
last-areas to be augmented in an economic up-
swing and one of the first to be trimmed in hard
times. (Such management actions are particular-
ly shortsighted. The manpower element con-
stitutes between 40% and 70% of the total costs
in most businesses. Yet personnel staff costs
usually range between i% and 2% of the pay-
roll. The leverage implied suggests that produc-
J% ity increases resulting from more effective and
relevant personnel action programs can signif-
icantly impact on revenue and profits.)
Because of these and other problems, there is a
clear need for personnel departments to develop
the kinds of program-management techniques
that will allow them to meet the productivity
crisis in a direct and systematic manner. From
a bewildering array of alternatives, they must
be able to select the programs that will improve
productivity and profits; then they must be able
to continuously allocate staff resources only to
those programs.
The purpose of this article is to describe a
framework which top operating and personnel
executives can use to channel the resources of
the personnel function to the most worth-
while undertakings. This framework, first im-
plemented at Xerox in 1971 as part of a long-
range manpower planning strategy, is currently
being used to develop operating budget proposals
for selected personnel units throughout the com-
pany. Here are the key procedural steps that I
shall discuss:
1. Define and describe each personnel program
-whether proposed or ongoing-in a discrete
package.
2. Separate for special treatment those pro-
grams that are legally required.
3. Evaluate all programs on the basis of these
factors: (a) "state of the art," (b) ease of imple-
mentation, (c) net economic benefits, (d) eco-
nomic risks of not acting.
4. Rank all programs, and allocate and deploy
staff resources accordingly.
Developing a framework
Our efforts to systematically evaluate and rank
personnel programs began as a follow-up to a
recent long-range planning cycle. The president
of our business products group asked us to review
our manpower requirements and to indicate
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what programs were underway or were needed
to ensure achievement of the plan. To accom-
plish this objective, we had to:
O Review our group's present and projected
revenue and profit economics.
O Identify and understand the ways that ma-
jor groups of employees (managers, scientists,
salesmen, servicemen, clericals, and hourlies) af-
fected our economic situation.
O Specify action programs that could increase
productivity or help avoid major manpower risks
and unnecessary costs.
While a discussion of how we conducted the
diagnosis is beyond the scope of this article, I
should note that over r2o possible program op-
portunities were identified. Many were already
underway, some were on the drawing boards,
and a few were entirely new opportunities.
Given the constraints of our budget, however, it
was clear that all programs could not be under-
taken. Some sort of resource-allocation tech-
nique was necessary, one that would permit us
to systematically sort out all the proposals as
well as manage and control the implementation
of the more desirable ones.
There is nothing fundamentally new about
the four-part approach we developed.' For years,
bankers have used systematic screening stan-
dards to evaluate credit worthiness. More recent-
ly, managers in virtually every business function
other than personnel have used decision frame-
works or models to assist them in selecting al-
ternate investment or project opportunities.
Usually, these techniques are quantitative;
sometimes they are subjective. But in either case,
they sh.r ' ' a systems approach.
The idea, then, was to apply the systems ap-
proach and program management concepts 'to
our personnel operations. Let us now turn to
an examin-ti of the key steps in Xerox's
program management framework.
1. Define and describe
The first step is for each staff specialist respon-
sible for a particular program to describe 1*
efforts-whether ongoing or proposed-in dis-
crete packages. He specifies the program's objec-
tives, target population, implementation sched-
ule, and any other considerations that might im-
pact on the program's success. (Exhibit I shows
a condensed form of the basic document used
1. See, for example, George R. Glaser, "Are You Working on the Right
Problem?" Datamation, June 1967, p. 22.
in our evaluation process for all programs. It
contains data on a job'enrichm.ent effort, a pro-
gram that I will refer to throughout this article
to illustrate our approach.) .
The personnel program manager, who is re-
sponsible for coordinating the entire depart-
mental effort, assists the staff specialist. The two
work as a team, so that each individual's capabil-
ities complement the other's. For example:
V On the one hand, the staff specialist (in
the case of Exhibit I, a job enrichment specialist)
is the most knowledgeable about the program's
objectives and technical aspects, the behavior-
al subtleties of the target population, and the
scheduling problems that might inhibit timely
implementation.
o On the other hand, the personnel program
manager can provide details on manpower
levels, salaries, productivity, absenteeism and
turnover rates, and spans of control, as well as
the costs and profit economics implied by each.
2. Identify legal requirements
Many of the resources of a personnel staff must
be allocated to programs required by law. Most
manpower legislation and regulations have been
enacted in the past decade in such areas as pen-
sion plans, minority hiring, labor relations, and
wage controls. Moreover, such legal require-
ments will probably increase in future years,
particularly among larger organizations, as the
traditional economic role of business is enlarged
to include a social one.
Obviously, the job enrichment program de-
tailed in Exhibit I is not a statutory necessity.
But other programs-in areas such as labor rela-
tions, minority relations and reporting, and pay-
roll-clearly are legal requirements. Moreover,
such programs rarely have any net economic
benefit to a company; their benefits are usually
intangible in nature. Yet the potential legal ex-
posure and the consequent impact on the com-
pany image dictate a need for special treatment..
Accordingly, legally required efforts are harul1 d
separately from all other proposals and assigned
the highest priority. Here are just a few illus-
trations from the spectrum of manpower regu-
lation:
O Reporting programs to maintain records of
hours, earnings, overtime, union dues collected,
and the financial health of existing or proposed
pension plans.
O Affirmative action plans to hire and up-
grade the skills of minority groups and women.
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Cost effectiveness for personnel
Exhibit I. Program evaluation form
4. Define and
describe
the program.
2. Identify and
segregate legally
required efforts.
3, Evaluate feasibility:
(a) State-of-the-art
implications.
(b) Ease of`
ir.iplementation.
c) Net economic
benefits...
PROGRAM NAME: Service Force Job Enrichment Program Program No. 16
DESCRIPTION (objectives, target population, implementation schedule):
To extend the job enrichment program for the service force --
as piloted in Spring Falls, Avon Hills, and Maplewood branches
-- to all branches between 1972 and 1976.
Is program legally requi red?. Yes No
Low
STATE OF THE ART High ^ Medium El
EASE OF IMPLEMENTATION El High E] Medium a Low
ECONOMIC BENEFITS High Medium G Low
F
Potential Probability Probable
revenue of gross benefit
Identifiable benefits:
impact occurrence ,-,st)
Reduction in service force
turnover of 1 point. $ 450,000 .2 $ 90,000
Extension of 1.2 point re-
duction in absenteeism, as dem-
onstrated in pilot project. $ 2,132,500 .8 $ J.,1O6,000
Extension of 5% increase in
service force productivity, as
demonstrated in initial efforts. $85,500,000 .1 $ 8,550,000
Total benefits $88,082,500 .12 $10,346,000
Tangible costs to Xerox of acting:
Group personnel staff time to
develop program, and line man-
agement time to implement
program in all branches. ($ 472,950) .9 $ 425,655
Total costs ($ 472,950) .9 $ 425,655
Probable net benefits (cost) $ 9,920,345
Intangible benefits
Increased morale in service force, with improved customer
service and satisfaction.
"Contagious effect" of job enrichment to other groups, e.g.,
sales and clericals.
Improved service manager development with concurrent sharpening
of tneir motivational skills. As an extreme example, one
manager at Avon Hills increased his team's productivity 70%.
ECONOMIC RISKS High a Medium F] Low
Possible consequences of not acting:
Continued escalation of service costs as a percent of revenue.
ASSUMPTIONS AND OTHER CONSIDERATIONS:
Cost estimates assume 4.4 man years of group staff time, .26 man
years of branch manager time, and 15.8 man years of service manager
time to implement program in a population of 1,053 service managers.
Benefit estimates assume elimination of 3 days absenteeism per
month for each of 1,053 service teams, favorable productivity, and that
turnover experience in pilot branches can be cascaded to all branches.
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0 Any validation efforts needed to insure that uated against the same standards. Part A of
pre-employment selection tests or standards Exhibit II shows these standards, which I feel
comply with the guidelines set by the federal are generally applicable to most companies.
government.
O Programs to insure a safe work environment
and to eliminate recognized hazards likely to
cause death or injury.'
Having identified and segregated such legally
required efforts, we are ready ' to focus on the
heart of the process-and its most challenging
aspect-the feasibility evaluation.
3. Evaluate feasibility
The feasibility evaluation of any program fo-
cuses on several distinct issues. These are:
Determining the state-of-the-art requirements.
Are the necessary skills available?
Determining the ease of implementation. Will
line management accept and execute the pro-
gram?
Determining the net economic benefits. Will
the program be cost-effective?
Determining the economic risks. Can the
company afford not to act?
I suspect that, to one degree or another, these
issues are considered intuitively by some top
personnel executives. But let us now examine
how each step of the feasibility evaluation is
handled systematically.
State of the art: The resolution of this issue re-
quires an in-depth assessment of a program's
technical problems as well as the skills available
withi,i tiii, personnel department or outside the
company (e.g., consultants) needed to overcome
these problems. If data processing support is
necessary, programming com.pl "xity and the
availability ui equipment must also be deter-
mined.
In the rase of the job enrichment program
shown in Exhibit 1, qualified technical talent
was already available on our staff; thus we could
evaluate the state of the art as "high." Three
or four years ago, however, this evaluation prob-
ably would have been "medium," for we would
have had to hire a qualified individual or retain
an expert consultant. Ten years ago, the evalua-
tion clearly would have been "low," since at
that time job enrichment would have been a
major state-of-the-art undertaking.
For comparative purposes, the technical feasi-
bility of all programs must be consistently eval-
Ease of implementation: This is the most critical
stage of the feasibility evaluation. It involves
such elements as line management attitudes,
corporate policies, organization structure, oper-
ating environment, and management styles.
These elements are difficult to change, particu-
larly when programs are in new areas such as
job enrichment, organization development, as-
sessment centers, and selection research.
The key to successfully implementing such
advanced concepts hinges on the willingness
of line management to cooperate. Reorienting
personality traits and management styles (which
many of the new techniques require) is more
challenging than gaining acceptance of a new
production process, a new marketing program,
or a new billing system. Most of the latter are
more tangible and can be "sold" exclusively on
their economic merits. But convincing managers
of the need to change their behavior is not only
difficult but also crucial to program implementa-
tion. Let us see how this issue was treated in
the job enrichment program:
From an earlier pilot program, we had learned
that selling the concept to management was
sometimes an uphill fight, and that overall co-
operation could be difficult to enlist. (A number
of supervisors and key line managers balked at
the idea of assigning greater responsibilities to
their subordinates.) But we also knew that we
had won converts and thus had increased the
program's credibility throughout the organiza-
tion. Because of the potential resistance, how-
ever, our evaluation of the ease-of-implementa-
tion factor was a qualified "low"-a mark that
injected a sobering element shouk;. the program
pass its other tests and be given the green light.
In other words, the program would be war-
ranted only if the risks identified in this stage
were clearly offset by exceptionally high evalua-
tions in other stages.
Finally, as with the state-of-the-art evaluation,
consistent standards must be applied when eval-
uating programs for ease of implementation.
These standards are shown in Part B of Exhibit
II; again, I feel they are generally applicable to
most business enterprises.
2. For a more complete discussion of this subject, see Willard A. Lewis,
"The Personnel Manager as Compliance Officer," Personnel journal.
December 1971, p. 907.
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Cost effectiveness for personnel
Exhibit II. Standards for feasibility evaluation
Program appears simple.
Skilled manpower available in
company.
EDP programming is simple.
Hardware available in company.
Medium Program appears complex.
Skilled manpower not available in
company but is available outside.
EDP programming is difficult.
Hardware not available in company but
is on the market.
Program involves new or unfamiliar effort.
Personnel not available on staff or
outside company.
EDP programming is very complex.
Hardware not available.
Implementing program requires little or
no effort to effect a change in line
management attitudes and styles, and in
organization policies, structure, and
operating environment.
Implementing program does not imply a
radical departure from nrstoric company
practices.
Implementing program requires moderate
efforts to effect a change in line
management attitudes arty Myles, and in
organization policies, structure, and
operating environment.
Implementing program implies some
departure from historic compa_. practices.
Implementing program requires substantial
efforts to effect a change in line
management attitudes and styles, and in
organization policies, structure, and
operating environment.
Implementing program implies a radical
departure from historic company practices.
Note: Standards for evaluation of the net economic benefits and the
economic risks have not been included in this exhibit since they
are not generally applicable to other companies.
Net economic benefits: At this stage of the eval-
uation, we use cost/benefit analysis, with mod-
ifications that are appropriate to the unique
needs of manpower management, to determine
whether a program will be cost-effective.
For the program shown in Exhibit I, our job
enrichment specialist, assisted by the personnel
program manager, identified potential benefits
and costs, estimated the probable occurrence of
each benefit and cost, and calculated the prob-
able dollar impact. In this case we were fortu-
nate. The pilot project mentioned earlier gave us
quantitative data regarding job enrichment's ef-
fect on turnover, absenteeism, and productivity.
For many other programs, however, it is par-
ticularly difficult to estimate potential benefits
and to establish a direct linkage between them
and the programs. To overcome this problem,
we estimate benefits by one of these two ap-
proaches:
1. Identifiable benefits. These are used when-
ever possible. They must be tangible and clear-
ly attributable to implementing the program.
An example of an identifiable benefit is the di-
rect savings achieved by eliminating redundant
functions in a proposed reorganization.
In other cases, we contrast the cost (for value)
of the existing approach with that of the pro-
posed approach. For example, one of our em-
ployment managers felt he could achieve a sig-
nificant savings by relying less on outside em-
ployment agencies. His identifiable benefit was
developed using the present cost of fees paid to
these agencies. The projected costs of additional
staff and advertising were subtracted from this
present cost to develop a net economic benefit
for his proposal.
Finally, if a pilot test has been conducted on
a small group of employees with favorable re-
sults, a plausible benefits estimate can be de-
veloped by projecting the savings identified in
the pilot test to the entire organization.
2. Target benefits. These are used in the ab-
sence of identifiable benefits. In essence, they
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are derived from a preliminary estimate of re-
sults to which the personnel manager is willing
to commit himself, if he is given the resources
to do.a pilot test of his proposal. An example of
a target benefit is a i % increase in revenue or
a one point decline in turnover, projected for a
given program.
In some cases, the personnel manager devel-
ops such estimates for each of his programs with
assistance from the program manager, the con-
troller's staff, or the long-range planning staff.
In other cases, our staff managers are able to
make sound cases for target benefits by consult-
ing their colleagues in other companies or by
reviewing the professional literature.
If, for some reason, management should chal-
lenge the estimated target benefit as being overly
ambitious, it is critical that management should
not become lost in quibbling over decimal ac-
curacy. One must remember that this procedure
is as much an exercise in allocating resources
toward projects that are most likely to yield the
greatest relative benefits as it is a means of com-
mitting oneself to results.
industry. Banks and insurance companies, for
example, would probably have substantially
higher risk standards than oil or chemical com-
panies have. (The revenues of the former are
highly sensitive to payroll costs.) Similarly, ser-
vice organizations, such as airlines, are more
vulnerable to strike losses than are hard goods
enterprises. (The latter can hedge such risks with
inventory.)
The benefits detailed for the job enrichment
program in Exhibit 1 are identifiable benefits.
They are based on the pilot project, and as-
sume that the results of that effort can be ex-
tended to other locations.
Intangible benefits and risks are also described
at this stage of the feasibility evaluation. While
some of these items may appear to be platitudes,
specifying them is nevertheless useful. When a
choice must be made between two programs of
almost equal merit, the intangibles-if properly
framed-r'.:-y become key factors that swing the
decision.
Economic risks: In the final stage of the feasibil-
ity evaluatic_:, consider the economic im-
pact of not implementing the proposal. For ex-
ample, a failure to continually reevaluate the
company's pre-employment selection standards
could result in the hiring of more marginal em-
ployees. (The costs of subsequent declines in
productivity could be estimated.) Or a failure iuu
increase productivity could result in unaccept-
able costs. (This approach was used to assess the
job enrichment program.)
Our standards for classifying economic risks,
ranging from over $i,ooo,ooo for "high" to
under $ioo,ooo for "low," are unique to our
company. Other companies may have higher
or lower standards, depending on their size or
4. Allocate and deploy resources
After each program has been evaluated on its
own merits, its overall feasibility must be de-
termined. The decision table shown in Exhibit
11I serves as a convenient tool to accomplish
this. It allows each program to be categorized
into one of the following overall feasibility cate-
gories: (a) very desirable, (b) moderately desir-
able, (c) marginally desirable, or (d) not worth-
while.
. Note that the table is structured so that a
high rating on any factor will. not conclusively
decide in favor of the program, but a low rating
on any factor could eliminate the program from
consideration. For example, Exhibit III shows
that while the job enrichment proposal was
rated "high" on three of the four individual
feasibility characteristics, the single "low" rating
(for ease of implementation) resulted in an over-
all feasibility assessment of only moderately de-
sirable.
When all programs have been classified in the
foregoing manner, they are ranked on the Pro-
gram Priorities Schedule shown in. Exhibit 111.
The legally required programs appear at the top
of the schedule. All other programs are ranked,
within the appropriate overall ieasibility cat-
egory, according to 'Lneir economic benefits.
(Note that the job enrichment progi am is ranked
third after the legally required programs.) Those
programs evaluated as "not worthwhile" appear
at the bottom of the schedule-for elimination.
And, if management limits the budget or man-
dates an austerity program, other programs, eau
be cut, starting with those of lowest priority.
The Program Priorities Schedule has become
our basic tool for allocating and deploying stab
resources. But to use it effectively, management
must undertake these actions:
Trim marginal programs. This is often dif-
ficult for management to do since it may in-
volve cutting some sacred cows (e.g., the execu-
tive jet or weekend retreats). But the fact remains
that eliminating marginal programs is one key
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Exhibit III. Decision table for determining program feasibility
Step 1. Evaluate feasibility and economic benefits/risks.
Using predefined standards, separately evaluate each
program's state-of-the-art implications, ease of implemen-
tation, net economic benefits, and economic risks of not
acting. The Service Force Job Enrichment Program was
evaluated (see Exhibit I) as follows:
State :.f tr,G art - High
Ease of implementation - Low
Not economic benefits - High
Economic risks - High
1. The "high" state-of-the-art
evaluation ...
is matched against "low" ease
of implementation.
Step 3. Compare Step 2 evaluation with net economic benefits.
2. Results of this evalu ition
are compared to "high" net
economic benefits.
Step 2. Compare technical (state-of-the-art) with opera-
tional (ease-of-implementation) feasibility.
State
Ease of implementation
of the art
HIGH
MEDIUM
LOW .
HIGH
Very
Very
Marginally
desirable
desirable
desirable
MEDIUM
Very
Moderately
Marginally
desirable
desirable
desirable
LOW
Marginally
Marginally
Not
desirable
desirable
worthwhile
Step 2
Net economic benefits
evaluation !
L-HIGH ,-:d
MEDIUM
LOW
Very :i
Very
Moderately
Marginally
desirable
desirable
desirable
desirable
Moderately
Very
Moderately
Marginally
desirable
desirable
desirable
desirable
Marginally
Marginally,
Marginally
Not
desirable
desirable -
desirable
worthwhile
l
Step 4. Compare Step 3 evaluation with economic risks to
determine
overall feasibility.
3. Results of this evaluation
Step 3
are matched against
"high" risks ...
evaluation
Very
Very
Moderately
Moderately
desirable
desirable
desirable
desirable
Moderately '.'.
Moderately
Moderately
Marginally
desirable ~?'
desirable
desirable
desirable
4.... to determine overall
feasibility category of
"
Marginally
Moderately
Marginally
Not
moderately desirable."
desirable
desirable
desirable
worthwhile
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 Harvard LusineasspRevovedl 6
luwdse 2002/05/09: CIA-RDP86-0002410 0100090007-4
Exhibit IV. Program priorities schedule
T
im
ing
Net C
ost/
ACTION PROGRAM
Pri
ority
rn
rn
rn
rn
m
annual b
dollar r
enefit
atio
r,
r,
r
benefit (
l:n)
LEGALLY REQUIRED PROGRAMS
Labor Relations Strategy
x
a
($ 619)
n/a
1. Legally required.
Protect Right to Select
efforts come first
i
Employees ..
x
($ 86)
n/a
Continue Validation of
J
Selection Tests
x
=
M
W
M
$35,000
78.17
Redesign Personnel Data
System
x
$ 273
1.78
2. .. then, other
Develop Part-Time` Female
programs are
Employment Approaches
x
II(II
W
N
ME
$ 227
4.16
ranked by overall
feasibility category ...
VERY DESIRABLE PROGRAMS
l
Restructuring Service Force
1
ME
M
M
m
_.'
$14,608
9.6
_
3. and within
Service College Coop Program
2
11111
111111
$ 4, 490'
2.74
feasibility category
,
by net benefits.
MODERATELY DESIRABLE PROGRAMS
Service Job Enrichment
3
MO
M
$ 9,920
24.3
.4. Priorities are
Assessment Center
Education & Training Center
g
4
5
E
111111
ME
11111
$ 4,946
$ 4,780
15.40
3.57
indicated here.
Clerical Selection' Program
6
IIIII
111111
$ 1,799
19.94
Develop College Campus as
Primary Employment Source
7
$ 834
2.06
Interfunctional Moves
& Fast Track Program
8
11111
$ 679
7.54
Selection Standards for New
Sales/Tech. Rep. Types
9
111111
1111
A; '3
$ 520
11.6
Improve Economics of Field
Employment Operations
10
ME,
$ 472
1.42
Build Better Technical Re-
cruiting/Selection Capability
Monitor Sales & Tech. Rep.
11
IIIII
$ 222
2.48
5. Starting from the
Selection Tests
12
yirt~m
$ 211
9.05
lowest priority
program, marginal
MARGINAL BUT DESIRABLE PROGRAMS
efforts may be
- .. _ , .~ .,
trimmed as required
Implement Executive
by the budget.
Search Function
13
IUlll
$ 177
1.67
Refine Career Path Guides
14
$ 110
1.75
Continue National Trend
Attitude Surveys
15
$ 107
1.33)
Reevaluate Overall
6. In any case,
Organization Approach
1 g
-
$ 93
2.37
these programs
~ T
are eliminated.
NOT WORTHWHILE
.
11111111 Program
Executive Retreat
x
($ 450)
n/a
and design
Corporate Jet
x
($ 769)
n/a
development
Savings Plan
x
11111
11111
($ 75)
n/a
MEN Program
Implementation
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 ,i t
Approved For (lase 2002/05/09: CIA-RDP86-00024100090007-4
Cost effectiveness for personnel
way of achieving the primary objective of busi-
ness-profitable operations.
Allocate and deploy staff resources toward the
most worthwhile projects. Timely program im-
plementation requires that staff resources be
deployed only toward the higher-ranked projects.
For some programs, staff members might be
transferred from areas that have been trimmed;
for other programs, particularly in highly tech-
nical areas, new people might have to he hired.
Furthermore, additional resources might be al-
located to worthwhile projects in order to speed
up their implementation date. In our job enrich-
-u iri.ent program, for example, we were able to
identify some highly favorable benefits. But with
only one man assigned to the program, achiev-
ing them wculd have taken four years. Because
of the ranking of this project and its potential
payoff, we were able to Justify additional re-
sources to ensure earlier results.
Evaluate all new program proposals and re-
order priorities as necessary. To be successful,
the evaluation procedure must be viewed as
dynamic and ongoing. As new proposals are
developed, they must be evaluated and ranked,
then accepted or rejected by the same standards
applied to all other efforts. Thus priorities may
be changed, and staff resources may be rede-
ployed, as circumstances warrant.
Reevaluate existing programs. Program prior-
ities must be changed not only to accommodate
new programs but also to reflect alterations of
existing programs. For example, the appoint-
ment of a new key executive in an operating
department may alter the ease-of-implementa-
tion evaluation of a particular program. Similar-
ly, the personnel staff may achieve a key break-
through that raises the state-of-the-art evalua-
tion. In short, any of a number of events could
trigger a chain reaction of reordered priorities
by altering the feasibility evaluation on one
aspect of a given program.
Monitor progress. The execution of each pro-
He is no wise man that will quit a
uncertainty.
Samuel Johnson,'1709-1784
The Idler
gram must be carefully monitored to identify
bottlenecks as they develop, chart alternatives
where necessary, and ensure timely implementa-
tion and achievement of planned benefits. This
task should be the permanent and ongoing re-
sponsibility of a personnel program manager or
a manpower planning manager.
Conclusion
The framework for evaluating and ranking per-
sonnel programs has enabled us to allocate re-
sources to those programs that should signifi-
cantly improve productivity and profit perfor-
mance. (A brief review of the benefits column
in Exhibit IV underscores the magnicude of this
improvement potential.) One of the key ad-
vantages of this framework is the discipline it
instills in the personnel staff. It encourages staff
members to rigorously assess their programs'
benefits and to evaluate the likelihood of achiev-
ing them. The procedure is by no means perfect,
but I doubt that an optimal approach will ever
be developed-particularly for staff projects.
However, it does provide personnel management
with a simple and systematic way to allocate
resources in an area where good intentions,
hunches, and poor information have cost many
companies heavily in lost opportunities.
Quite conceivably, the same concepts may be
applied to other functional areas in future years.
But whether or not that happens, I believe the
approach I have described can be implemented
now in the personnel operations of many orga-
nizations, particularly the larger ones. This ap-
proach would permit organizations to move
away from "gut-feel" techniques and the intrigue
and politics too often characteristic of budget-
ing and resource-allocation decisions. In a more
positive vein, it can guide management to the
gains in profit and productivity that come from
personnel programs targeted on results.
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