Question: Question 1 - C7 Read Appendix 7-A and answer the following questions. Assuming you are a compensation manager, and you are filling a manager position

Question 1 - C7

Read Appendix 7-A and answer the following questions.

Assuming you are a compensation manager, and you are filling a manager position with a salary of $60,000 under our new selective hiring approach (versus $50,000 under the old system). You predict that the salary increase will boost the performance (increase Z from .80 to 1.75). Also, the validity coefficient performance predictor (r) is 0.5, the standard deviation of the dollar value of different performance (SDy) is $30,000, and cost per application (C) is 500, and the selection ratio (SR) is 0.25.

Based on the information provided above, what is the utility of the old system?

What is the utility of the new system?

Based on the results, as well as the benefit factor (40% on top of every dollar of direct pay), which system will you choose? Why?

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