Selection

The principle of employee selection is relatively simple: HR managers collect and combine current information on candidates. Despite the best process, information and analysis, the selection is like predicting the future (i.e., how well they will perform a job). Predicting future performance and human behaviour is known to be very difficult. People are complex and their behaviour is not as predictable as what we would like to think. Errors in our assessment and selection of candidates do happen. The mistakes, or errors, that occur can be put in two separate categories, Type I or Type II.

Type I error: This error occurs when you select someone who turns out to be a poor performer. Type 1 errors, or ‘false positive’ errors^[1]‘, are relatively easy to detect and we all have examples of people who obtain jobs for which they were ill-suited. These errors are costly for organizations: production or profit losses, damaged public relations or company reputation, accidents due to ineptitude or negligence, absenteeism, etc. in addition to the costs associated with training, transfer, or terminating the employee. Costs of replacing the employee, the third type of cost, includes costs of recruiting, selecting, and training a replacement. Generally, the more important the job, the greater the costs of Type I errors.  A spectacular example of a Type I error occurred in the US Space Program and NASA. The incredible story of astronaut Lisa Nowak is an example of the fact that even the most rigorous selection system can lead to Type I errors.

Type II error: This error takes place when a selection process fails to detect a potentially good performer. Type II errors are different than the first type in that they are harder to detect (i.e., the person is never given a chance to perform) – and predicting the future was difficult. As a result, costs associated with ‘false negative’ errors, as they are also referred to, are generally difficult to estimate. A context in which the impact of a false negative can be detected and measured is in professional sports. In the 1984 National Hockey League draft, Patrick Roy, one of the greatest goaltenders of all time and quite possibly the best clutch goaltender in NHL playoff history, was not taken until the third round. For all of the NHL teams that passed him over (twice, some three times!), he was definitely a Type II error!

It is clear that organizations would want to minimize these selection errors as much as possible. However, doing so can be quite tricky because the two types of errors are negatively related to each other. Think of the NASA example. NASA, to make sure that all astronauts have the ‘right stuff’, relies on one of the most rigorous selection system ever designed (for those interested, check out the selection process for Mars One, aimed to establish a permanent human settlement on Mars). While this process will be effective in minimizing Type I errors (false positive), it will inevitably lead to many Type II (false negatives) and screen out potentially strong candidates. Conversely, an organization that wants to minimize Type II (i.e., make sure that it does not let ‘diamonds in the rough’ slip away), will inevitably suffer from a higher rate of Type I errors. Thus, Type I and Type II errors are related and one or the other is inevitable for organizations. The objective is to simply minimize them or even better, make less of these errors than your competitor.

Making The Offer

References

Falcone, P., “The New Hire: Five Questions to Ask before Making the Job Offer,” n.d., Monster.com, accessed July 13, 2011, http://hiring.monster.com/hr/hr-best-practices/recruiting-hiring-advice/acquiring-job-candidates/making-a-job-offer.aspx.