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Handout Chapter 3 - Each of these 50 employees must be...

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18 We know how many people we have in each of our levels/jobs right now. We record that number in the leftmost column labeled as “Initial Level.” (NOTE: It’s already done for you here). We look at our company records and make our best guess as to what percentage of employees (EEs) move to another level or out of the company (exit) in the near future. Note that each row must sum to 1.0. (NOTE: The transition probabilities are recorded for you here. That is, 70% of the Level 1 EEs remain in Level 1, while 10% get demoted to Level 2, etc.)
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19 We now apply those transition probabilities (percentages) from the last step to our initial staffing levels. Note that each cell for each row must sum to the initial staffing level. For example, there are 50 employees in Level 1.
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Unformatted text preview: Each of these 50 employees must be placed into a cell on Level 1 ` s row and these five cells must sum to 50. Some rounding might be required. (So…79% of 50 EEs is equal to 35, 10% of 50 EEs equals 5, etc.) Now we simply sum the columns from and we will have our best estimate of how many employees we will have in each of Levels 1-4 and how many will l exit z the firm by the end of the period. Note that the number of EEs in these five cells comprising a row must sum to the number present of the level in step one. That is, an EE cannot simply disappear; they must be in either Level 1-4 or have exited. So, for example, the number of employees in the Level 1 row absolutely must sum to 50....
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