Real Estate World: This is a comprehensive exercise that addresses many personne
ID: 3302937 • Letter: R
Question
Real Estate World: This is a comprehensive exercise that addresses many personnel selection concepts. Real Estate World is trying to improve their selection process for hiring real estate agents. A successful real estate agent, according to the company, is one that can sell a minimum of 50 houses per year. The company believes that the key to successful real estate is perseverance. To test this hypothesis the company administers The Perseverance Assessment (TPA) to 75 applicants holding a proper real estate license. The company hires all of the applicants that scored higher than 3 on the TPA and gives all of them one year to see how they perform on the job. Given below are applicant scores on the TPA as well as how many houses each sold in the year. Answer the questions that follow TPA score 10 # houses sold in the year 78 67 65 59 55 79 61 61 61 58 56 56 50 48 47 69 65 64 63 59 56 50 50 50 49 45 44 42 41 31 72 66 56 55 54 53 52 51 51 51 50 43 42 33 21 62 61 60 59 52 49 48 45 44 43 42 40 40 29 20 55 52 51 50 50 43 41 33 29 18 57 49 40 27 22 8 6 4 Questions: 1. 2. 3. If 150 applicants scored 3 or lower on the TPA and thus were not hired, what was the selection ratio for this job? If 50 houses sold per year is the criterion for success, what is the base rate for real estate agents with Real Estate World? If the company decides to use 8 as the passing score on the test, how many: True positives? False positives? True negatives? False negatives? 4. What percentage of the 75 employees were correct selection decisions, and what percentage were incorrect decisions, What do these results suggest about the value of the TPA test to select real estate agents?Explanation / Answer
Part (1)
As per the given data, 75 applicants were selected and 150 were not hired. So, out of 225 applicants, 75 applicants were selected. =>
Selection Ratio = 75/150 = 1/2 = 1 : 2 ANSWER 1
Part (2)
Given data is summarized in a particular way in the following table to facilitate answering the questions.
PTA Score
Selection Status
# of hired applicants with sale of 50 or more houses
# of hired applicants with sale of less than 50 houses
Total
3 or less
Not hired
Not applicable
Not applicable
150
4
Selected
1
4
5
5
Selected
5
5
10
6
Selected
5
10
15
7
Selected
11
4
15
8
Selected
9
6
15
9
Selected
8
2
10
10
Selected
5
0
5
Total
-
44
31
225
As can be seen from the above table, out of 75 applicants selected based on PTA score of 4 or more, only 44 could sell 50 or more houses per year, which is considered by Real Estate World as the bench mark of good performance. Thus, the base rate of real estate agents with Real Estate World is: 44/75 = 0.5866 or 58.67% ANSWER 2
Part (3)
Of those who got a PTA score of 8 or more, 22 sold 50 or more houses while 8 could sell only less than 50 houses. Thus,
true positive is 22 out of 30 ANSWER 3 and
false positive is 8 out of 30 ANSWER 4
Similarly,
true negative = 23 out of 45 ANSWER 5 and
false negative = 22 out of 45 ANSWER 6
[For Answers 3 to 6, refer above table. ‘true negative’ represents PTA score of 7 or less and house sale of less than 50 and ‘false negative’ represents PTA score of 7 or less and house sale of 50 or more]
Part (4)
Referring to the above table, out of 75 applicants selected based on PTA score of 4 or more, only 44 could sell 50 or more houses per year, which is considered by Real Estate World as the bench mark of good performance. Thus,
correct selection decision is 44 out of 75 ANSWER 7 and
incorrect selection decision is 31 out of 75 ANSWER 8
Comment on efficacy of PTA score as a selection aid:
With PTA score of 4, only 59% of selected applicants performed well. Also, with PTA score of 8, only 73% is true positive and 51% is false negative. All these figures raise doubts on the efficacy of PTA score as a selection tool. ANSWER 9
PTA Score
Selection Status
# of hired applicants with sale of 50 or more houses
# of hired applicants with sale of less than 50 houses
Total
3 or less
Not hired
Not applicable
Not applicable
150
4
Selected
1
4
5
5
Selected
5
5
10
6
Selected
5
10
15
7
Selected
11
4
15
8
Selected
9
6
15
9
Selected
8
2
10
10
Selected
5
0
5
Total
-
44
31
225
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