Utility Analysis Case

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Question 1. What is the goal of utility analysis? Why do recent models of utility fail to accomplish this goal?
Answer
Utility Analysis (UA), not only is the process where the description and prediction determines the desirability of decisions; it provides formulas for computing the dollar value of human resource programs (Boudreau, 1987). UA also examines how the information obtained are going to affect manager’s decisions. Utility refers to the expected gains to be derived from using a predictor (Heneman, Judge & Kammeyer-Mueller, 2011). Per, Heneman et al. (2011), there are two types of expected gain, economic and hiring success. Utility analysis endorses the conclusions of those other studies which have confirmed the economic utility
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Hiring organizations use UA for specific methods that mirrors the consequences of performance activities that are used to improve the value of their workforce (Boudreau, 1988). Although UA has its goals, Schmidt and Hunter (1994) however, maintains that to examine a single selection event Utility top-down methods will in the aggregate sense, return maximum utility. Cascio, Zedeck, Outtz & Goldstein (1994) suggested the ultimate utility of any selection system cannot always be examined at the individual job-candidate or employee level. The parameter in a utility model suggest that the job content is important in determining the usefulness of selection practices (Baoudreau,1991; Wilk, Cappelli, …show more content…
Some of the pros and cons associated with banding are as follows. One of the major advantages is that it helps reduce adverse impact. Therefore, it is most effective if the hiring organization use minority preference inside a band. By ignoring the small differences in test scores, banding nullifies some of the errors on selection instrument scores an organization use (Campion et al, 2001). Although test score may vary depending on the true score, Campion et al., (2001) banding does contradict the linear relationship between performance and test scores that is known. A limitation with banding is that with banding it sacrifices validity, especially when the selection measure is reliable (Heneman, Judge & Kammeyer-Mueller, 2011). When scores are in bands, it is easy to lose information thus variability with scores may not be accurate and thereby the will be a loss of utility. Banding does ignore that actual differences exist within 1.96 SD; thus, score differences less than or equal to 1.96 SD, can be large and is important for future performance in the organization; loss of utility (Campion et al.,

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