Utility analyses Flashcards
What do the different utility models measure?
→ Taylor-Russell: increase in proportion of successful employees
→ Naylor-Shine: increase in average job performance levels
→ BCG model: increase in monetary benefits
What is the predictor cutoff?
the minimum amount applicants need to score on a selection procedure to be accepted
What is the criterion cutoff?
What you want to predict (e.g. job performance) and the minimum of which you find people successful
What is the difference between the base rate, selection ratio and success ratio?
→ Base rate: the number of people in the entire candidate pool that would have been successful before selection
→ Selection ratio: the number of people you hire who score above the predictor value
→ Success ratio: the outcome of the utility model, the proportion of people you hire that are successful. Sometimes this can include false hires
When to use the Taylor-Russell model and what are its limitations?
→ Performance differences are irrelevant, as long as they are above a minimum level
→ Performance differences are difficult to measure
→ Limitations: too simple, performance differences are often relevant
When to use the Naylor-Shine model and what are its limitations?
→ Performance differences are relevant, but difficult to express in monetary value (e.g. grades of students)
→ Limitations: managers prefer to see utility expressed in monetary costs and benefits
When to use the BCG model and what are its limitations?
→ Performance differences are relevant and can be expressed in monetary value
→ Limitations: relatively complex model to explain (because of the SDy)
How to convince managers to use selection tools? (Hazer & Highhouse, 1997)
- Use the 40% salary method of determining SDy as it uses national data and is easiest to understand
- When framing, express in loss instead of what you gain as humans are risk averse people
