Goal of Utility Analysis and Decision Making and Cons of Banding Assignment


Heneman, H. H., Judge, T. A., Kammeyer-Mueller, J. (2011). Staffing Organizations (7th ed.). New York: McGraw-Hill. Chapter 11.

Whyte, G., & Latham, G. (1997). The futility of utility analysis revisited: When even an expert fails. Personnel Psychology, 50, 601-610.

Schmidt, F. L., & Hunter, J. E. (1998). The validity and utility of selection methods in personnel psychology: Practical and theoretical implications of 85 years of research findings. Psychological Bulletin, 124, 262-274.

**Wilk, S.L., & Capelli, P. (2003). Understanding the determinants of employer use of selection methods. Personnel Psychology, 56, 103-124.


Schmitt and Landy (1993), from Week 5 readings, pointed out that the utility (value of a selection system to the organization) has been a concern since Munsterberg’s early selection validation research. More recently, researchers have evaluated and argued about the factors that will influence the utility of selection systems, including comparisons with other predictors, applicant and managerial reactions, adverse impact, and the use of multiple predictors, among other things. In this module, the readings will better acquaint you with these issues.

Important terms from the readings:

utility analysis, hiring success & economic gain, selection ratio, base rate, compensatory models, multiple hurdles model, cut scores, innovative, quality enhancement, and cost reduction strategies, standard deviation in dollars of performance, dollar metrics, managerial decision making


Please answer two of the following questions. You must answer Question 1. Then choose any one of the other questions. The first question is worth 10 points, the second question you choose is worth 5 points.

  1. What is the goal of utility analysis? Why do recent models of utility fail to accomplish this goal?  (REQUIRED)
  2. What do Whyte & Latham mean by “the futility of utility”?
  3. What is banding? Discuss the pros and cons of banding, including the legal implications.
  4. What are the positive consequences associated with a high predictor cutoff score? What are the negative consequences?
  5. Under what circumstances should a compensatory model be used? When should a multiple hurdles model be used?

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