I'm looking for a paper that explicitly quantifies the ROI an employer would likely derive if personnel selection involved intelligence testing and only those +2 SD in cognitive ability were hired.
There's a correlation between IQ and job performance, ranging from .20s for low complexity jobs and .50 for high complexity jobs. Hardly unity (r = 1.00) but regardless, it's still considered to be the best predictor of job performance.
A number of years ago as an undergrad I read a paper discussing the economic rationale of an employer administering an IQ test and only selecting candidates who scored +2 SD above the mean. From the pool of candidates remaining, the employer would then interview for the best candidate as per usual. The author's thinking was along the following lines:
Suppose you had a group of employees who you were paying an annual salary of \$100,000 and their productivity was normally distributed between say, \$100,000 - \$300,000 (mean = $200,000).
By selecting those who are +2 SD in cognitive ability, the employer would increase the chances that those who are hired will return them closer to $300,000 per year.
Total economic gain = Number of employees x Increased return ($) x Duration of tenure
This topic is relevant to a publication I'm preparing and I've been racking my brain trying to find it. For the life of me I simply cannot find it.
Does this ring a bell for anyone? Ideally, I'd like the specific one that I'm mentioning, but failing that, something in a similar vein. Essentially: suppose you hired only those >130 IQ -- regardless of the rightfulness/wrongfulness of doing so, what I want to know is what the $ amount benefit to the employer would be.