For a minute, assume that you are the recruiter with special skills that allow you to pick 90 per cent of the time, the top 10 per cent of high potential candidates (HIPOs) from a group of prospective employees. If you land up at a recruitment drive, what would be your success rate? Ninety per cent, correct?
Think again. The fact is that in a room full of say, one hundred candidates, with ten being the top highest HIPO, you would be successful in picking nine of them (that is a 90 per cent accuracy). You have made an error of not being able to pick the tenth HIPO (false negative). Now comes the rub: of the balance ninety people in the room, who are not HIPO’s, you have been interviewing them as well, and you make an error in selecting nine of them as HIPOs (a false positive). That is because you have only 90 per cent accuracy and 10 per cent inaccuracy or error. This is known as Type 1 and Type 2 error.
Thus, an organisation may end up rejecting a ‘fit’ candidate or may end up accepting an ‘unfit’ candidate. In this example, it selected nine correctly and nine incorrectly, a total of eighteen candidates.
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