Section One
To a certain extent, the distinction between general and
specific training is misleading. There are probably few skills that
have no transferability to other employers. Likewise, probably
few skills are completely general. Further, employers do not
seem to make clear distinctions between general and specific
training.^14 There are many considerations in layoff decisions in
addition to the employer’s investment, such as equity,
contractual obligations, and different business needs.
Nonetheless, the concepts of specific and general training can
provide insights on the conditions in which investments in
human resources are more favorable.
Utility Theory
In considering investments in human resources in terms of
hiring or development of current employees in order to pursue
given strategies, there must be a method for evaluating the
financial attractiveness of such investments. There must also be
a method to be used in “selling” the investment to senior
management. These tasks may be accomplished by
determining the returns for such investments through cost–
benefit analytical approaches such as utility analysis. Utility
theory attempts to determine the economic value of human
resource programs, activities, and procedures. As such, utility
theory might be used to determine the dollar value of a
selection test that enables an employer to identify and hire