question archive Explain the Type I and II Decision Error Costs for the following situation: "The HR department is trying to fill a vacant position for a job with a small talent pool

Explain the Type I and II Decision Error Costs for the following situation: "The HR department is trying to fill a vacant position for a job with a small talent pool

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Explain the Type I and II Decision Error Costs for the following situation:

"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 is to be made."

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Type I Error Costs

Sometimes, during the hiring process, the recruiters can go through the recruitment process and hire an individual who they think is qualified. Perhaps the individual is convincing enough on paper and the interviews in general. However, when it comes to delivering on the job, the management realizes that the person is not fit for the job. This is a Type I error cost. It is expensive and potentially harmful. Getting a meaningful employee will require the business to, once again, start the recruitment process, potentially wasting a lot of money and time. In our context, HR can potentially hire the wrong fit for the job and lead the business into losses.

Type II Error Costs

In other cases, during recruitment, the recruiters can skip a candidate who is the right fit for the job. Even though this is better than the first type of error, it has its costs as well. Imagine a situation where two competing companies are recruiting for the same critical position. If company A fails to recognize the potential of an employee, the employee can go interview at company B and get accepted. If the employee is really good at their job, that is bad news for company A which failed to recognize the individual's potential. This could also happen in our context.

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