The executive search being conducted for Western Bank by Headhunters, Inc. may finally be bearing a fruit. The position to be filled is a key one – Chief Information Office – because this person will have responsibility for developing a state-of-the-art management information system that will link together Western’s many branch banks. However, Headhunters feels they have found just the right person, Matthew Fenton, who has an excellent record in a similar position for a mid-sized bank in New York.
After a round of interviews, Western’s president believes that Mr. Fenton has a probability of 70% of designing the management information system successfully. If Matthew is successful, the company will realize a profit of $2 million (net of Matthew’s salary, training, recruiting costs, and expenses). If he is not successful, the company will realize a net loss of $400,000.
For an additional fee of $20,000, Headhunters will provide a detailed investigative process (including an extensive background check, a battery of academic and psychological tests, and so on) that will further pinpoint Matthew’s potential success. This process has been found to be 90% reliable, that is, a candidate who would successfully design the management information system will pass the test with probability 0.9, a candidate who would not successfully design the system will fail the test with probability 0.9.
1. Western’s top management needs to decide to hire or not to hire Mr. Fenton.
2. Assume that you want to use the Analytic Hierarchy Process to hire the best candidate for the CIO position at Western Bank. Construct a hierarchy to make the Hire/No-Hire decision.
3. Which method do you think would be provide a more reliable solution to the hiring problem? Explain.