An employee suggestion system is a formal process for capturing, analyzing, implementing, and recognizing employee-proposed organizational improvements. Using data from the National Association of Suggestion Systems, researchers examined the strengths of the relationships between the extent of employee participation in suggestion plans and cost savings realized by employers (Review of Public Personnel Administration, Spring 1993). The data in the table on the next page are representative of the data they analyzed for a sample of federal, state, and local government agencies. Savings are calculated from the first year measurable benefits were observed.

Data for Exercise 15.90

Employee Involvement_____________________________________ Savings Rate

(% of all employees submitting suggestions) _______________ (% of total budget)

10.1% .................................................... 8.5%

6.2 .......................................................... 6.0

16.3 ......................................................... 9.0

1.2 .......................................................... 0.0

4.8 .......................................................... 5.1

11.5.......................................................... 6.1

.6 ............................................................1.2

2.8 .......................................................... 4.5

8.9 .......................................................... 5.4

20.2 ....................................................... 15.3

2.7 .......................................................... 3.8

a. Explain why the savings data used in this study may understate the total benefits derived from the implemented suggestions.

b. The researchers concluded that a significant moderate positive relationship exists between participation rates and cost savings rates in public sector suggestion systems. Do you agree? Test using a = .01

c. Justify the statistical methodology you used in part b?