Question

The HR department is trying to fill a vacant position for a job with a small talent pool. Valid applications arrive every week or so, and the applicants all seem to bring different levels of expertise. For each applicant, the HR manager gathers information by trying to verify various claims on resumes, but some doubt about fit always lingers when a decision to hire or not to hire is made.

What are the Type I and Two decision errors costs?

Which decision error is more likely to be discovered by the CEO?

How does this affect the HR manager's hiring decisions?

Answer 1

For an HR trying to fill a vacant position for a job, following are the Type I and Type 2 error costs:

Type I error cost = Cost of Hiring a person not suitable for job

Type II error cost = Cost of missing out on a suitable person for a job.

Type II error is more likely to be discovered by the CEO because it lingers over the selection of right candidate which is based on resume and competency of the applicants.

In case of Type I errors, hiring managers become very conventional in hiring process to avoid the hiring of a non- suitable person. They dont adopt a unique or new approach to hire the best employee for the job.

Also, in case of Type 2 errors, generally based on CEOs opinions, HR managers end up making changes in the recruitment plan and might also need to change budgets for position accoridngly.