Answers:
Pekin Ogan Model has been suggested by Pekin Ogan (1976) is, in fact, an extension of net benefit approach of Morse. This approach presents a new concept of determination of certainty equivalent net benefits stream for each employee in an organisation.
Under this approach, the value of human resources is determined by taking into consideration the certainty with which the net benefit’s in future will accrue to the enterprise.
The method involves the following steps:
· Each employee’s net benefit (as determined under the previous approach) which are a function of the employee’s expected benefits and total costs.
· A certainty factor which is comprised of the employee’s probability of continued employment and probability of survival.
· The certainty equivalent benefits will be calculated by multiplying the certainty factor with the net benefits from all employees. This will be the value of human resources of the enterprise.
Needless to say, Ogan’s model is certainly an improvement over other models presented earlier in this unit. It takes the “cost” generated by the employees for the organisation, which the other models have ignored.
The major shortcoming of the model is that it can be applied only in those organisations where costs and benefits of employees can be traced with fair objectivity.