Reference no: EM133181647

Conectado is a major telemarketer that provides telemarketing services to small businesses looking to grow their customer-based on a limited budget across the Asia-Pacific region. The firm employs around 400 telemarketers, but turnover is a high annual rate of 40%, which raises recruitment and training costs. After reading about applications of artificial intelligence (AI) in recruitment, Mario, the HR Director, believes that modern recruitment technologies may be able to reduce turnover rate and costs by identifying better-fitting candidates in a cost-effective manner. 

He engaged an agency to custom-design a digital screening tool with video-interviewing capabilities. Recruitment of telemarketers typically takes 4-5 months due to the manual processes. After introducing the new screening tool, the time spent was significantly reduced. Mario is interested in quantifying the financial benefits of the new recruitment tool to decide whether to continue investments in the tool. As the HR manager, you have been tasked to assess the benefits of digital screening and conduct a management brief. 

(a) Distinguish between predictive validity and utility and discuss which construct is more appropriate for assessing the benefits of the digital screening tool.

(b) Using data from below:

INFORMATION FROM TRIAL OF DIGITAL SCREENING TOOL

Table 1. Information on Digital Screening Tool

Cost of digital screening (development plus recurrent costs)	$25 per applicant
Predictive validity of digital screening tool	0.40

Table 2. Telemarketer Turnover and Job Information

Annual Turnover of Telemarketers Before New Tool	160
Annual Turnover of Telemarketers After New Tool	80
Dollar value of telemarketer job	$2,000
Number of applicants per telemarketer vacancy	8

Table 3. Recruitment Information

Before Video-Conferencing Tool
Time Taken by HR Executive to manually screen applicants and arrange for second interview	2hr (per applicant)
After Video-Conferencing Tool
Time Taken by HR Executive to digitally screen applicants and arrange for second interview using the digital screening tool	30mins (per applicant)

*Assuming five work weeks per month and 8 working hours per day.

Table 4. Salary of Personnel

Hourly wage of HR executive	$20.00 per hour ($41,600 per year)
Hourly wage of Telemarketer	$30.00 per hour ($62,400 per year)

(i) Calculate the per applicant utility of the digital screening tool and recommend if Conectado should continue using the tool with explanation. 

(ii) Calculate the maximum cost they should pay per applicant if they are thinking of enhancing the features in the digital screening tool. 

(c) Distinguish between cost savings and avoidance with illustrations from the case and calculate the ROI for employing digital screening using these concepts. 

You presented your findings and assessments at the management meeting. The Chief Operations Officer, Harry, remarked 'Recruiters, who interact with applicants, are definitely better judges of an applicant's suitability as a telemarketer. We should not rely on data and algorithms to make people's decisions.' 

(d) Discuss if you agree or disagree with Harry's remarks, provide reasons for your position with illustration.