Factors influencing managers' reactions to utility analysis: Effects of SDy method, information frame, and focal intervention.

Abstract

Managers' reactions to utility analysis were investigated as a function of how the standard deviation of performance (SDy) in dollars was estimated, how the ultimate utility estimate was framed, and what human resource (HR) program was being analyzed. Managers (N = 179) read a scripted dialogue between an HR manager and a company president describing a utility analysis of a trial HR program. The dialogues differed between subjects by SD y method (40% salary vs. global vs. the Cascio-Ramos estimate), information frame (cost vs. gain), and HR intervention (selection vs. training). Results showed that managers were most favorable toward utility analysis when the 40% salary method was used to calculate SD y . Also, an interaction was found between framing condition and manager comprehension of the utility material. Those managers having a stronger comprehension of the utility information presented were not affected by information frame. However, managers with less comprehension of the utility information were more favorable toward utility analysis when it was presented as an opportunity cost rather than as a monetary gain.