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Chapter 10. The Payoff from Enhanced Sel... > Cumulative Effects of Adjustments

Cumulative Effects of Adjustments

At this point, you’re probably asking yourself how adjustments for all five of these factors—economic variables, employee flows, probationary periods, multiple selection devices, and rejected job offers—affect estimates of utility. One study used computer simulation of 10,000 scenarios, each of which comprised various values of the five factors just noted. Utility estimates were then computed using the five adjustments applied independently.23

The study found that although the unadjusted utility values we’ve seen are quite substantial, the effects of economic factors, departures from top-down hiring, and probationary periods can reduce them substantially. Accounting for economic variables had the largest effect, followed, in rank order, by multiple selection devices, departures from top-down hiring, probationary period, and separations of high performers. The total set of adjustments reduced the utility values by a median level of 91 percent, with a minimum reduction of 71 percent. Thus, considering reasonable values of these adjustments, the remaining utility values might be between 9 percent and 29 percent as large as the unadjusted values. The simulation actually produced negative utility estimates (the costs of improved selection exceeded the benefits) in 16 percent of the cases.


  

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