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Selection Portfolio: Applying Modern Portfolio Theory To Personnel Selection, Eric Leingang

All Graduate Theses, Dissertations, and Other Capstone Projects

Modern Portfolio Theory (MPT) is a framework for building a portfolio of risky assets such that the ratio of risk to return is minimized. While this theory has been used in the field of financial economics for over sixty years, the method has not yet been applied to compensatory personnel selection. A common method for personnel selection is multiple regression to maximize the predicted performance of the selected group given a cut-off score on the predictor(s). Recognizing that maximizing the performance of the selected group is not the only consideration, and that, for many jobs and organizations, the outcomes of …