AN EVALUATION OF ALTERNATIVE METHODS OF ESTIMATING THE STANDARD DEVIATION OF JOB PERFORMANCE TO DETERMINE THE UTILITY OF A TEST IN A FIXED-TREATMENT SEQUENTIAL EMPLOYEE SELECTION PROCESS

The utility of organizational selection procedures has become of increasing interest as the costs associated with selection programs continue to increase. The major difficulty associated with utility analysis appears to have been estimating the standard deviation of job performance in dollar terms (SDy).;The organizational setting for this study was a large multi-branch Bank. The people involved in this study were low tenure Tellers hired in part by the selection procedure under investigation, Head Tellers, and Branch/District Managers employed by this Bank.;The results of this study indicated significant differences by organizational level in the estimates of SDy. The accounting estimate of SDy corresponded only to the estimates made by the Branch/District Managers. The accounting estimates of individual output did not correspond to the estimates of individual value made by Head Tellers. The estimated utility of the selection procedure was shown to vary considerably depending on which estimates were used for the parameters in the equation for assessing utility.;These results indicated that the subjective method of estimating SDy might not be the optimal solution for utility analysis. Specific recommendations are made to investigate the process by which these estimates of SDy are made. Further, limitations in the current theorizing of the potential impact of selection programs on productivity are discussed.;This study investigated whether: (1) there were differences in the estimates of SDy derived from different organizational levels using a subjective approach for estimating SDy, (2) the subjective judgment method for estimating SDy was associated with an accounting estimate of SDy, (3) an accounting criterion of individual output corresponded to an estimate of individual employee value made by supervisors using a variation of the subjective methodology of estimating SDy, and (4) estimated the utility of a selection procedure currently in use by the organization.