Utility analysis: do estimates and format matter?

Abstract

Purpose

The present study aims to examine how adjustments to utility analysis (UA) estimates and restructuring UA information to include a tabular format affect managerial acceptance of a selection test.

Design/methodology/approach

Managers across organizations (n=185) indicated whether they would accept and implement a new selection test based on a hypothetical scenario. They were randomly assigned to different scenarios based on UA dollar estimate size and visual format of the information.

Findings

Overall, managers were indifferent to the dollar size of the UA estimate and were not influenced by presentation format. Managers did report use of UA information when making decisions and qualitative analyses revealed several patterns that help explain why this information was useful.

Practical implications

When presenting UA information, practitioners should reexamine how they build support for both sides of the benefits‐costs equation, potentially adding information beyond UA dollar amounts such as legal liability and company reputation.

Originality/value

The quandary remains regarding how to communicate the value of human resource initiatives to organizational stakeholders. The paper adds to the literature by investigating two variables not previously examined, the size of UA dollar estimates and the format used to present UA information. More importantly, the study incorporates a unique qualitative component to better understand managers' use or non‐use of UA and corresponding rationale.

Citation

Macan, T., Lemming, M.R. and Foster, J.L. (2013), "Utility analysis: do estimates and format matter?", Personnel Review, Vol. 42 No. 1, pp. 105-126. https://doi.org/10.1108/00483481311285255