Testing in Industrial &

Business Settings
How are people hired for a particular
job or position?
Employment interview
Can be influenced by extraneous factor such as age,
disability status, gender, race
Use of tests
When used in addition to interview & other sources
of information, can improve chances of successful
selection
Base Rates & Hit Rates
tests often used to make dichotomous decisions:
Pass/fail
Accept/reject
Hire/dont hire
E.g., use of an 1100 score on the GRE to decide
on whom to reject or whom to process further
This value is a cut-off score or a cutting score
The problem with cutting scores
Some people who have scores above the cutting
score will do poorly
Some people who have scores below the cutting
score would have done well
Hits & Misses
Hit Miss

Miss

Hit
Decision on basis of cutting score
Accept Reject
Actual
Outcome
Success
Failure
Hit Rate
Percentage of cases in which a test accurately
predicts success or failure
Hits & Misses
20 40

10

30
Decision on basis of cutting score
Accept Reject
Actual
Outcome
Success
Failure
What is the hit rate?
Base Rate
The selection or pass rate obtained without
using the test
E.g., using only undergraduate grades, letters of
reference, etc. (no GRE), 70% of individuals
selected are successful in completing their
degree
If hit rate using the test is only 60%, test is of no
value
False negatives & false positives
There are two types of misses:
False negative
Individuals not selected (because of a score below the cutting score)
who would have been successful in job or program (e.g., GRE has
high false negative rate)
Concluding on the basis of a test that a tumor is benign
Concluding on basis of a test that someone is not suicidal, when
he/she actually is
False positive
Individuals selected for job or program who fail
Concluding on the basis of a test that someone has AIDS, when they
do not have the disease

Hit False
negative

False
Positive

Hit
Decision on basis of cutting score
Hire as pilot Reject
Actual
Outcome
Success
Failure
What is more dangerous, false +ve or false ve?
Hit False
negative

False
Positive

Hit
Decision on basis of cutting score
Diagnose
Aids
Diagnose
No Aids
Actual
Disease
Status
Has AIDS
Doesnt
Have AIDS
What is more dangerous, false +ve or false ve?
Costs of False Negatives
& False Positives
For certain decisions, false negatives will have a
high cost
E.g., diagnosing a person as not having AIDS when
she really does have it; that a person is not suicidal
when he really is
For other decisions, false positives will have a
high cost
E.g. hiring someone as a commercial pilot when he
is likely to crash the plane
Test Performance
Actual
Outcome
Cutting Score
Success
Failure
False -ve
False +ve
False negative, positive & criterion validity
Changing Rate of False Negatives &
False Positives by adjusting the
cutting score
To reduce the number of false negatives, lower
the cutting score
To reduce the number of false positives, raise the
cutting score
A
8
B
2

C
15

D
75
Decision on basis of cutting score
Diagnose
Aids
Diagnose
No Aids
Actual
Disease
Status
Has AIDS
Doesnt
Have AIDS
Detection rate (sensitivity) = A/(A+B) = 8/10
Accuracy Rate = (A+D)/(A+B+C+D) = 83/100 (83%)
Taylor Russell Tables
helps evaluate validity of test in relation to amount it
contributes beyond base rates
Requires
Definition of success -- patient lived, success on job, school
Determination of base rate
Definition of selection ratio -- % applicants selected
Validity coefficient
table gives likelihood that person selected on basis of
test score will be successful
Taylor-Russell Table for a Base Rate of .60
Class Exercise
Suppose that you are director of graduate studies in psychology at Wilfrid Laurier
University. You can choose 10 students for the graduate program. A total of 50
students apply to the program, and normally you would make your decision on the
basis of undergraduate grades, letters of recommendation, work and volunteer
experiences, and the like. In the past, about 60% of the students whom you admit
complete their degrees. Up to this point, your program has not required applicants
to submit GRE scores, but you are considering adding a GRE requirement for
new applications, even though it correlates only about .25 with success in graduate
school.

What is the base rate of success in this instance?

What is your success rate adding the GRE?

How many people will you reject that would probably have been successful in the
program? (i.e., how many false negatives will there be?)

How many people will you accept who will likely not complete the program? (how
many false positives will there be?)

7 23

3

17
Decision on basis of cutting score
Accept Reject
Actual
Outcome
Success
Failure
Base rate - .60
Selection ratio - .20
Validity coefficient - .25
30
20
10 40 50
Tests for Use in Industry
Bennett Mechanical Comprehension Test
Mechanical ability
Minnesota Clerical Test
Clerical skills
Computer Programmer Aptitude Battery
Computer programming skills

Integrity Tests
Also known as honesty tests
Paper-and-pencil inventories used for personnel
selection to identify potentially dishonest or
counterproductive employees
American businesses lose from $15- to $25-
billion per year due to employee theft
30% of all business failures attributed to
employee theft
Personnel Selection Inventory (PSI)
Includes scales that measure:
Honesty
Drug avoidance
Tenure or job commitment
Safety
Work values
Supervision attitudes
Validity
Candidness
Accuracy
Sample Items
Responses are recorded on 7-point scale ranging from
far more than average (1) to far less than average (7)
Validity of PSI
In 1982 & 1983 a chain of home improvement centers screened more than
4,000 applicants with PSI to help reduce on-the-job theft and drug abuse.
PSI not used from 1979 to 1981
shrinkage losses reduced from $7.5 million to $5.25 million
Number of employees terminated for using drugs at work reduced from 16
in 1981 to 1 in 1983
Measuring Characteristics of the
Work Setting
Based on the premise that work environments
will influence the productivity and satisfaction of
individuals who work in those environments
Rudolph Moos developed scales to measure
several different kinds of environments:
Work environments
Classrooms
Correctional institutions
Work Environment Scale
10 subscales, organized into 3 dimensions:
Relationship
Personal growth
System maintenance & system change
Relationship Dimension
Involvement (extent to which employees are
concerned about & committed to their jobs)
people seem to take pride in the organization
Peer cohesion (extent to which employees are
friendly & supportive of one another)
Theres not much group spirit
Supervisor support (extent to which
management is supportive of employees)
supervisors tend to talk down to employees
Personal Growth Dimension
Autonomy (extent to which employees are
encouraged to be self-sufficient)
people can use their own initiative to do things
Task orientation (degree of emphasis on good
planning, efficiency & getting the job done)
this is a highly efficient, work-oriented place
Work pressure (degree to which the press of
work & time urgency dominate the job milieu)
there is constant pressure to keep working
System Maintenance & System
Change Dimension
Clarity (extent to which employees know what to expect)
things are sometimes pretty disorganized
Control (extent to which management uses rules &
pressures to keep employees under control)
Supervisors keep a rather close watch on employees
Innovation (degree of emphasis on variety, change, new
approaches)
New & different ideas are always being tried out
Physical comfort (extent to which physical surroundings
contribute to pleasant work environment)
work space is awfully crowded
Sample WES Profiles