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

Answer 1

Type 1 error is also known as a false positive error in the decision-making process. It occurs when recruiters incorrectly reject honest candidates over a guilty candidate. It is the incorrect rejection of the null hypothesis and causes false-positive results. Type 1 error rejects an idea at the time of making a decision that should not be dismissed. Type 1 error is often observed in the medical testing of any recruitment process.
Type 2 error is known as a false-negative error in the decision-making process. It occurs when recruiters fail to reject the incorrect null hypothesis. It indicates choosing the wrong person for the job inspired by several biases.
Type 2 errors are more likely to be discovered by the management, and it is often observed at the time of interview where recruiters give importance to their own beliefs and biases and judge candidates based on that. As a result, organizations suffer in many ways. Biases lead less talented candidate recruitment over a talented and skilled one which may impact on the quality of the workforce of the organization.
Both type 1 and type 2 errors affect the human resource department in making decisions regarding choosing the right candidates for the right position. They fail to imply the right objectives. It also impacts on the decision regarding payment structure and payrolls. Due to these kinds of errors, the human resource department suffers conflicts between employees. Talented and skilled candidates earn less salary than others. It also hampers the motivational aspects of employees.