An employee suggestion system is a formal process for capturing, analyzing, implementing, and recognizing employee-proposed organizational improvements. (The first known system was implemented by the Yale and Towne Manufacturing Company of Stamford, Connecticut, in 1880.) Using data from the National Association of Suggestion Systems, D. Carnevale and B. Sharp examined the strengths of the relationships between the extent of employee participation in suggestion plans and cost savings realized by employers (Review of P~lblic Personnel Administration, Spring 1993).The data in the table at right 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.

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

b. Carnevale and Sharp 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.