Pay rise

A new CEO takes over the company which is organised as two
groups; senior management and non-senior management. The
CEO promises to raise the average salary of both groups by 10%.

Being a canny CEO he manages to do this with one simple decision.
It doesn't cost the company a penny.
And nobody is fired.

What did the CEO do?

Transfer a lot of overpaid people into the non-senior management group.

Move some portion of the lowest-paid members of each group into a third group.

Maybe they were using the median and he switched to the mean?

Originally posted by iamatiger
Maybe they were using the median and he switched to the mean?

No. He was a mean SOB that CEO.
He increased both groups mean salary by 10%

Originally posted by forkedknight
Move some portion of the lowest-paid members of each group into a third group.

yes.
example?

Person 1 makes 10,000
Person 2 makes 20,000
...
Person 9 makes 90,000

Start, Persons 1-4 are in non-senior management. (10+20+30+40)/4 = 25
Persons 5-9, senior management. (50+60+70+80+90)/5 = 70

Move Persons 5-7 into non-senior management.

Now, non senior management = (10+20+30+40+50+60+70)/7 = 40
Senior management = (80+90)/2 = 85

Both groups increased average by 15,000!

This one's regularly used by Aussies and Kiwis when they're talking about their own population compared to the others. "If all the Kiwis in Australia went home they'd increase the average IQ of both groups." The same method of calculation is used, i.e. the implication here is that the expat Kiwis are a much smarter group than the stay-at-home Kiwis, but still not as clever as the average Aussie. And vice-versa, of course, depending on the speaker's nationality. 🙂

Originally posted by AThousandYoung
Person 1 makes 10,000
Person 2 makes 20,000
...
Person 9 makes 90,000

Start, Persons 1-4 are in non-senior management. (10+20+30+40)/4 = 25
Persons 5-9, senior management. (50+60+70+80+90)/5 = 70

Move Persons 5-7 into non-senior management.

Now, non senior management = (10+20+30+40+50+60+70)/7 = 40
Senior management = (80+90)/2 = 85

Both groups increased average by 15,000!

That's way more than 10% .. your CEO is too generous!

I had an example where moving just one employee increased both group's mean by 10%.

Has any company tried something like this to bamboozle the Unions?

Originally posted by Kewpie
This one's regularly used by Aussies and Kiwis when they're talking about their own population compared to the others. "If all the Kiwis in Australia went home they'd increase the average IQ of both groups." The same method of calculation is used, i.e. the implication here is that the expat Kiwis are a much smarter group than the stay-at-home Kiwis, but sti ...[text shortened]... er as the average Aussie. And vice-versa, of course, depending on the speaker's nationality. 🙂

Well it's Kiwis to Oz of course!! 😉