Worksheet: Utility Analysis to determine estimated dollar value of individual performance

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Step 1: Determine the complexity of the job based on information-processing demands and then identify the multiplier statistic in Table 1

Low-complexity unskilled, semi-skilled

Medium-complexity skilled crafts, technicians, first-line supervisors, lower level administrative

High complexity managerial, professional, complex technical setup Step 2: Identify the appropriate Job Complexity row in Table 1 determined from Step 1 and insert the Job Title into the appropriate cell. Step 3: Insert the mean or average job salary into the appropriate cell in Table 1 Step 4: Calculate the standard deviation using the multiplier statistic. Job Salary X Multiplier Statistic = Standard Deviation in dollars

Table 1 2 3 1 4

Job Complexity Job Title Job Salary Multiplier Statistic Standard Deviation ($1SD)

Low-complexity $ 0.19 $ Medium-complexity $ 0.32 $ High-complexity $ 0.48 $ Step 5: Using the calculated Standard Deviation from Table 1, calculate the $SD (standard deviations) for +1, +2, +3 and -1, -2, -3 and place into row 1 in Table 2.

(Note: 0 standard deviations is $0)

+$1SD = 1 x $1SD = +$ +$2SD = 2 x $1SD = +$ +$3SD = 3 x $1SD = +$ -$1SD = 1 x $1SD = -$ -$2SD = 2 x $1SD = -$ -$3SD = 3 x $1SD = -$

Table 2 Productivity Loss Average Productivity Gain

-3SD -2SD -1SD 0SD +1SD +2SD +3SD 5 $ SD $ 0 6 $ Productivity $

Job Salary

Worksheet: Utility Analysis to determine estimated dollar value of individual performance

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Step 6: Calculate the $ Productivity. First, enter the average Job Salary in the 0SD cell.

Second, simply add the $SD from row 1 to the Job Salary and insert them into the appropriate cells in row 2.

Step 7: Read the table. $ SD (row 1) displays the difference in individual productivity in dollar value output compared to the average productivity in dollar value output. $ Productivity (row 2) displays the difference in individual productivity in Total Dollars (dollar value to the organization) of job salary compared to the average productivity in dollars of job salary. Sources: Hunter, John E., Frank L. Schmidt, and Michael K. Judiesch. (1990). “Individual differences in output variability as a

function of job complexity,” Journal of Applied Psychology 75(1), pp. 28-42. Judiesch, Michael K., Frank L. Schmidt, and Michael K. Mount. (1992). “Estimates of the dollar value of employee output

in utility analysis: An empirical test of two theories,” Journal of Applied Psychology 77(3), pp. 234-250.