Estimating the impact of variable costs on SDy in complex situations

The inclusion of variable costs when estimating the standard deviation of job performance in dollars has been the basis for a number of highly important advances in utility analysis (e.g. Boudreau, 1983; Boudreau & Berger, 1985). However, no studies have shown the feasibility of incorporating variable costs in situations where multiple types of costs might require global estimation of variable costs. Results obtained from a nationwide sample of insurance personnel indicated that global estimates of variable costs were feasible to obtain in such complex situations but that those costs were not a fixed percentage of the value of job performance. Judges reported that the most important inputs of information into their estimates of the value of job performance in dollars were performance and output as well as initiative of the job holder. Surprisingly, salary related information was not reported as a relatively important input.The authors wish to thank Patricia G. Roth, Bart Osburn, and Jim Phillips for reviewing previous drafts of this work and contributing their valuable comments. The paper has improved as a result of their insights.