Selection ratio and base rate

Staffing Activities: Employment

Chapter 11: Decision Making

Chapter 12: Final Match

McGraw-Hill/Irwin

Part 5
Staffing Activities: Employment

Chapter 11:

Decision Making

Staffing Policies and Programs

Staffing System and Retention Management

Support Activities

Legal compliance

Planning

Job analysis

Core Staffing Activities

Recruitment: External, internal

Selection:
Measurement, external, internal

Employment:
Decision making, final match

Staffing Organizations Model

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Chapter Outline

Choice of Assessment Method
Validity Coefficient
Face Validity
Correlation with Other Predictors
Adverse Impact
Utility
Determining Assessment Scores
Single Predictor
Multiple Predictors
Hiring Standards and Cut Scores
Description of Process
Consequences of Cut Scores
Methods to Determine Cut Scores
Professional Guidelines
Methods of Final Choice
Random Selection
Ranking
Grouping
Ongoing Hiring
Decision Makers
HR Professionals
Managers
Employees
Legal Issues
Uniform Guidelines on Employee Selection Procedures
Diversity and Hiring Decisions
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Learning Objectives for This Chapter

Be able to interpret validity coefficients
Estimate adverse impact and utility of selection systems
Learn about methods for combining multiple predictors
Establish hiring standards and cut scores
Evaluate various methods of making a final selection choice
Understand the roles of various decision makers in the staffing process
Recognize the importance of diversity concerns in the staffing process
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Discussion Questions for This Chapter

Your boss is considering using a new predictor. The base rate is high, the selection ratio is low, and the validity coefficient is high for the current predictor. What would you advise your boss and why?
What are the positive consequences associated with a high predictor cut score? What are the negative consequences?
Under what circumstances should a compensatory model be used? When should a multiple hurdles model be used?
What are the advantages of ranking as a method of final choice over random selection?
What roles should HR professionals play in staffing decisions? Why?
What guidelines do the UGESP offer to organizations when it comes to setting cut scores?
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Choice of Assessment Method

Validity Coefficient
Face Validity
Correlation With Other Predictors
Adverse Impact
Utility
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Validity Coefficient

Practical significance
Extent to which predictor adds value to prediction of job success
Assessed by examining
Sign
Magnitude
Validities above .15 are of moderate usefulness
Validities above .30 are of high usefulness
Statistical significance
Assessed by probability or p values
Reasonable level of significance is p < .05
Face validity
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Correlation With Other Predictors

To add value, a predictor must add to prediction of success above and beyond forecasting powers of current predictors
A predictor is more useful the
Smaller its correlation with other predictors and
Higher its correlation with the criterion
Predictors are likely to be highly correlated with one another when their content domain is similar
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Adverse Impact

Role of predictor
Discriminates between people in terms of the likelihood of their job success
When it discriminates by screening out a disproportionate number of minorities and women,
Adverse impact exists which may result in legal problems
Issues
What if one predictor has high validity and high adverse impact?
And another predictor has low validity and low adverse impact?
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Utility Analysis

Taylor-Russell Tables
Focuses on proportion of new hires who turn out to be successful
Requires information on:
Selection ratio: Number hired / number of applicants
Base rate: proportion of employees who are successful
Validity coefficient of current and “new” predictors
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Utility Analysis

Economic Gain Formula
Focuses on the monetary impact of using a predictor
Requires a wide range of information on current employees, validity, number of applicants, cost of testing, etc.
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Limitations of Utility Analysis

Determining the dollar value of performance is extremely subjective and variable for many jobs, and requires making many assumptions about how performance leads to economic success
Important variables are missing from model
EEO / AA concerns
Applicant reactions
Utility formula based on simplistic assumptions
Validity does not vary over time
Non-performance criteria are irrelevant
Applicants are selected in a top-down manner
and all job offers are accepted
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Discussion Questions

Your boss is considering using a new predictor. The base rate is high, the selection ratio is low, and the validity coefficient is high for the current predictor. What would you advise your boss and why?
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Determining Assessment Scores

Single predictor
Multiple predictors
Three models shown
Multiple hurdles model
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Relevant Factors: Selecting
the Best Weighting Scheme

Do decision makers have considerable experience and insight into selection decisions?
Is managerial acceptance of the selection process important?
Is there reason to believe each predictor contributes relatively equally to job success?
Are there adequate resources to use involved weighting schemes?
Are conditions under which multiple regression is superior satisfied?
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Ex. 11.4: Combined Model
for Recruitment Manager

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Hiring Standards and Cut Scores

Issue -- What is a passing score?
Score may be a
Single score from a single predictor or
Total score from multiple predictors
Description of process
Cut score - Separates applicants who advance from those who are rejected
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Exh. 11.5: Consequences of Cut Scores

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Hiring Standards and Cut Scores
(continued)

Methods to determine cut scores
Minimum competency
Top-down
Banding
Professional guidelines
Ex. 11.6: Use of Cut Scores in Selection Decisions

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Discussion Questions

What are the positive consequences associated with a high predictor cut score? What are the negative consequences?
Under what circumstances should a compensatory model be used? When should a multiple hurdles model be used?
Methods of Final Choice

Random selection
Each finalist has equal chance of being selected
Ranking
Finalists are ordered from most to least desirable based on results of discretionary assessments
Grouping
Finalists are banded together into rank-ordered categories
Ongoing hiring
Hiring all acceptable candidates as they become available for open positions
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Ex. 11.8: Methods of Final Choice

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Decision Makers

Role of human resource professionals
Determine process used to design and manage selection system
Contribute to outcomes based on initial assessment methods
Provide input regarding who receives job offers
Role of managers
Determine who is selected for employment
Provide input regarding process issues
Role of employees
Provide input regarding selection procedures
and who gets hired, especially in team approaches
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Discussion Questions

What are the advantages of ranking as a method of final choice over random selection?
What roles should HR professionals play in staffing decisions? Why?
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Legal Issues

Legal issue of importance in decision making
Cut scores or hiring standards
Uniform Guidelines on Employee
Selection Procedures (UGESP)
If no adverse impact, guidelines are silent on cut scores
If adverse impact occurs, guidelines become applicable
Choices among finalists
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Discussion Questions

What guidelines do the UGESP offer to organizations when it comes to setting cut scores?
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Ethical Issues

Issue 1
Do you think companies should use banding in selection decisions? Defend your position.
Issue 2
Is clinical prediction the fairest way to combine assessment information about job applicants, or are the other methods (unit weighting, rational weighting, multiple regression) more fair? Why?