Observations Observations

March 1, 1998

Imagine 40 corporate billboards moving at 160 miles per hour. Each "sign" comes with its own celebrity to endorse the product. Millions focus on the televised image for an entire afternoon. This is NASCAR racing, where names like Kellogg's, Tide, and Kodak spent $441 million in sponsorship last season, more than the total spent on major league basketball, baseball, football, and hockey combined.

The sport has grown dramatically since the early 1990s. New Hampshire International Speedway recently added seats for the 90,000 fans that attend two Winston Cup races there every season. What's more, NASCAR marketing studies find that the fans in the stands are extremely loyal 72 percent are more likely to buy products from NASCAR sponsors than from anyone else.

Many factors foster this bond. The intense audiovisual experience brings fans closer to the action and, in a sense, to the driver. Drivers sign autographs for free and, with radios set to the proper frequency, fans can listen to their driver communicate with his pit crew.

Television networks also tune in to the accessibility of the sport On-board cameras give the viewer the driver's perspective, as well as a glimpse of the sponsor's logo strategically placed on the dashboard. Cameras in the rear of some machines focus on the bumper-to-bumper racing, allowing fans the thrill of potential danger in a carefully controlled environment.

And what happens after a dramatic crash or spinout? As fans wait for their favorite driver to walk away from the wreckage, the sponsor benefits from the extra time that the camera is trained on a vehicle with its logo.



Say Yes. Maybe.

University admissions officers walk a tight line. "After decision letters go out, students are really in the driver's seat, and it's the admissions people who are biting their nails," observes Paul Bauer, director of admissions at Northeastern University School of Law. If too many students enroll, schools face crowding and resource strains. If too few enroll, financing the budget becomes difficult. So, how do schools decide how many students to accept?

Most rely on historical trends tempered by admissions directors' instincts. The simplest method calculates a single 'anticipated yield rate' for the entire applicant pool based on previous yields. More complex methods break out the pool by student characteristics, such as gender, financial aid, and test scores, and calculate yields for each group.

But miscalculations happen. For the Class of 2000, Brown University ended up with 90 students more than expected, forcing the school to convert student lounges into dorm rooms. And accepted students at Northeastern University School of Law were asked to consider postponing enrollment after the school's enrollment goal was exceeded by 70 students last fall.

So, some schools use more elaborate models which calculate the likelihood that each student will enroll by figuring the independent effect of each student characteristic on yield rates. As financial aid increases, the student is more likely to enroll; higher grades mean a student has more options making enrollment less likely.

Still many factors, such as the effect of marketing or recent publicity, are impossible to model. As Wylie Mitchell, director of admissions at Bates College, says, "Something as trivial as the weather can affect an accepted student's decision." A surprise snowfall on Accepted Students' Day has had significant effects on Bates's yield rates.



Help Given

Temporary help firms are unusual; they advertise "free" computer skills training up-front and without obligation. All a candidate needs to do is complete a lengthy interview and a basic-skills test. At their leisure, they can use the firm's computers to master programs such as Microsoft Excel.

One might not expect temp agencies to pay for basic training that employees can then take to other firms, yet 78 percent of temp firms do so. Obviously, training spurs workers to improve their skills. But there's more to it; with high turnover rates, offering "free" skills training is also a cost-effective way of recruiting and screening motivated and capable workers, says David Autor, a Ph.D. student at Harvard University.

Autor argues that workers who think that they can learn new skills easily and that their wages will increase as a result, are more likely to choose firms that train. But it's not a free lunch. Autor found that average wages were slightly lower at those firms. Thus, temp firms that offer training can attract better applicants and split the costs with the temps who "pay" with initially lower paychecks.

Training also allows firms to observe each temp's ability to learn new skills, an elusive quality not easily observed by reading a résumé or conducting an interview. The firm can compare test scores before and after training to gauge its employees' capabilities. This information facilitates efficient placement and reduces hiring costs. Moreover, client firms partly base their hiring decision on the temp firm's reputation - and training programs factor in. Thus, temp firms benefit when they provide free training and advertise it well.