Quantitative Business Analysis Question

Business Analytics

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Employee turnover is the rate at which employees leave an organization. This cannot be predicted easily since they are several factors at play for an employee to be leave an organization. One of the main factors which plays a big role is the amount of salary employees a paid. Other factors are such as relationship with colleagues, time and career choice which affect each employee differently.

Considering they are different types of employees and if we had to choose several we would be forced to choose them randomly. We cannot be able to tell the designation or the type of work the employees does in the company. It is all purely random. This therefore makes an employee a random variable.

Keeping the other factors that affect employee such as career choice and time constant and taking only the salary we can be able to estimate the employee turnover. It is quite obvious that salary follows a normal distribution. This is since the individuals who are paid highly and those who are paid less are always less in any organization. The ones who have a medium salary are the majority in an organization. This leads to the graph of salary to be inform of a bell curve which is a normal distribution.

Normal distribution would therefore be the chosen distribution rendering the discrete distributions, uniform and exponential distribution unusable. Binomial would have been used in a situation where there would have been only two possible outcomes which have too be repeated several times. Exponential distribution cannot be used since it grows bigger and bigger.

We would be forced to find the expectation and variance of salary to be able to estimate the turnover.

Let the expectation of salary be E(S) = μ and v

Variance Var(S) =

The equation that would be used would be

with x being the variance of salary

This would be easy to estimate the level of turn over for each salary bracket.