Problem #1 Utility Analysis

A company wants to determine if their use of an assessment center for identifying upper-level managers was producing the results anticipated. They provide you their newest and brightest HR analyst - with the following information:

Number of Applicants Selected	10
Test validity	.30
Average Salary for this job	$100,000
Average Z score of those selected	1.25
# applicants tested	25
Cost of testing each applicant	$4,000

You search through your old Staffing class notes and find the following equation.

Utility = N_s r_xy SD_y Z_x - N_T C

Unfortunately, you didnt write down what any of the letters stand for. But, you think awhile, and recall how to use the equation.

Based on the results of this analysis (which you will show below), would you recommend your company continue to use assessment centers for these managers? Why or why not?