Staffing Organizations Chapter 9: External Selection II ©McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education. Learning Objectives for Chapter 9 • Distinguish among initial, substantive, and contingent selection • Review the advantages and disadvantages of personality and cognitive ability tests • Compare and contrast work sample and situational judgment tests • Understand the advantages of structured interviews and how interviews can be structured • Review the logic behind contingent assessment methods and how they are administrated • Understand the ways in which substantive and contingent assessment methods are subject to various legal rules and restrictions ©McGraw-Hill Education. Applicant Methods By Applicant Flow Stage • Initial assessment methods • Minimize the costs associated with substantive assessment methods by reducing the number of people assessed • Substantive assessment methods • Used to make more precise decisions about candidates • More involved than initial assessment methods ©McGraw-Hill Education Jump to Applicant Methods By Applicant Flow Stage, Appendix External Selection II Substantive Assessment Methods ©McGraw-Hill Education Overview of Personality Tests • Current role of personality tests e.g., role of Big Five – Describe behavioral, not emotional or cognitive traits – May capture up to 75% of an individual’s personality – Big Five factors (Personality Characteristics Inventory etc.) • Emotional stability-calm, optimistic, and well adjusted • Extraversion-sociable, assertive, active, upbeat, and talkative • Openness to experience-imaginative, attentive to inner feelings, have intellectual curiosity and independence of judgment • Agreeableness-altruistic, trusting, sympathetic, and cooperative • Conscientiousness-purposeful, determined, dependable, and attentive to detail • Roughly 50% of the variance in the Big Five traits appears to be inherited ©McGraw-Hill Education. Sample Personality Items from the International Personality Item Pool • Conscientiousness – I am always prepared. – I pay attention to details. – I am exacting in my work. • Extraversion – I am quiet around strangers. (reverse-scored) – I take charge. – I am skilled in handling social situations. ©McGraw-Hill Education. Sample Items from the Personal Characteristics Inventory • Agreeableness – I have a soft heart. – I insult people. (reverse-scored) – I have a good word for everyone. • Emotional Stability – I am relaxed most of the time. – I seldom feel blue. – I have frequent mood swings. (reverse scored) • Openness to Experience – I have a vivid imagination. – I love to think up new ways of doing things. – I try to avoid complex people. (reverse scored) ©McGraw-Hill Education. Overview of Personality Tests Big Five Trait Advantages Disadvantages Conscientiousness • Better overall job performers • Higher levels of job satisfaction • More likely to emerge as leaders • Fewer deviant work behaviors • Higher retention • Lower adaptability Emotional stability • Better overall job performers • Higher levels of job satisfaction • More effective leaders • Higher retention • Less able to identify threats • More likely to engage in high risk behaviors ©McGraw-Hill Education. Overview of Personality Tests Big Five Trait Advantages Disadvantages Extraversion • Perform better in sales • More likely to emerge as leaders • Higher levels of job satisfaction • Higher absenteeism • More accidents Agreeableness • More valued as team members • More helping behaviors • Fewer deviant work behaviors • Lower career success • Less able to cope with conflict • Give more lenient ratings Openness • Higher creativity • More effective leaders • More adaptable • Less committed to employer • More deviant work behaviors • More accidents ©McGraw-Hill Education. The Core Self-Evaluations Scale • Items indicating high levels of core self-evaluation – I am confident I get the success I deserve in life. – When I try, I generally succeed. – I complete tasks successfully. – Overall, I am satisfied with myself. – I determine what will happen in my life. – I am capable of coping with most of my problems. • Items indicating low levels of core self-evaluation – Sometimes I feel depressed. – Sometimes when I fail, I feel worthless. – Sometimes, I do not feel in control of my work. – I am filled with doubts about my competence. – I do not feel in control of my success in my career. – There are times when things look pretty bleak and hopeless to me. ©McGraw-Hill Education. Criticisms of Personality Tests • Trivial validities – Correlations for any individual trait with job performance are typically low (around r=.23) – However, when all traits are used simultaneously, correlations are higher • Faking – Individuals answer in a dishonest way – However, tests still have some validity, and it may be that being able to “act” conscientiously may be related to real job performance • Negative applicant reactions – Applicants, in general, believe personality tests are less valid predictors of job performance ©McGraw-Hill Education. Overview of Ability Tests • Measures that assess an individual’s capacity to function in a certain way • 15 to 20% of organizations use ability tests in selection • Two types – Aptitude – Assess innate capacity to function – Achievement – Assess learned capacity to function ©McGraw-Hill Education. Four Classes of Ability Tests • Cognitive – Perception, memory, reasoning, verbal, math, expression • Psychomotor – Thought/body movement coordination • Physical – Strength, endurance, movement quality • Sensory/perceptual – Detection & recognition of stimuli ©McGraw-Hill Education. Evaluation of Cognitive Ability Tests • Validity approaches .50 • Research findings – Among the most valid methods of selection – Often generalizes across organizations, job types, and types of applicants – Can produce large economic gains for organizations and provide major competitive advantage – Validity is particularly high for jobs of medium and high complexity but also exists for simple jobs – A simple explanation for validity: those with higher cognitive ability acquire and use greater knowledge ©McGraw-Hill Education. Evaluation of Cognitive Ability Tests • Concern over adverse impact and fairness of tests – Blacks and Hispanics score lower than whites – This gap is narrowing somewhat over time – Alternative presentation formats (e.g., verbal tests) decrease differences in scores dramatically while producing nearly equivalent scores • Applicants’ perceptions – Reactions to concrete vs. abstract test items ©McGraw-Hill Education. Other Types of Ability Test • Psychomotor ability tests – Reaction time, arm-hand steadiness, control precision, and manual and digit dexterity • Physical abilities tests – Muscular strength, cardiovascular endurance, and movement quality • Sensory/perceptual abilities tests – Ability to detect and recognize environmental stimuli ©McGraw-Hill Education. Emotional Intelligence • The ability to monitor one’s own and others’ feelings, to discriminate among them, and to use this information to guide one’s thinking and action – Self-awareness: Good at recognizing and understanding one’s own emotions – Other awareness: Good at recognizing and understanding others’ emotions – Emotion regulation: Good at making use of or managing this awareness ©McGraw-Hill Education. Emotional Intelligence • A review of many studies indicated that, overall, EI correlated poorly with job performance after personality traits were considered • Some critics argue that because EI is so closely related to intelligence and personality, once you control for these factors, EI has nothing unique to offer. ©McGraw-Hill Education. Performance Tests and Work Samples • Definition — Assess actual performance (e.g., fix a car, teach a class, type a document) • Types of tests (should focus on relevant KSAOs) – Performance test vs. work sample (all or some) – Motor vs verbal work samples (action or thought) – High- vs. low-fidelity tests (level of realism) – Computer interaction performance tests vs. paper-andpencil tests including simulations (e.g., The Manager’s Workshop) • All the above can have good validity (.50+) & acceptance ©McGraw-Hill Education. Situational Judgment Tests • Place applicants in hypothetical, job-related situations. • Applicants are then asked to choose a course of action from several alternatives • Capture the validity of work samples and cognitive ability tests in a way that is cheaper than work samples and that has less adverse impact than cognitive ability tests ©McGraw-Hill Education. Example Situational Judgment Test Items: Retail Industry Manager, 1 You are the assistant manager of a large department store. One weekend day while you are in charge of the store, a customer seeks to return a pair of tennis shoes. The employee in charge of the customer service department has refused to accept the return. The customer has asked to speak to the manager, and so the employee has paged you. Upon meeting the customer, who is clearly agitated, you learn that the customer does not have a receipt, and, moreover, you see that the shoes are clearly well worn. When you ask the customer why she is returning the shoes, she tells you that she has bought many pairs of shoes from your store, and in the past they have “held up much better over time than these.” ©McGraw-Hill Education. Example Situational Judgment Test Items: Retail Industry Manager, 2 You recognize the shoes as a brand that your store has stocked, so you have no reason to believe the customer is lying when she says that she bought them from your store. Still, the shoes have clearly been worn for a long time. Should you: • Issue a refund to the customer • Check with your boss, the store manager, when he is at the store on Monday • Deny a refund to the customer, explaining that the shoes are simply too worn to be returned • Inform the customer of the current sale prices on comparable tennis shoes ©McGraw-Hill Education. Example Situational Judgment Test Items: Park Ranger, 1 You are a park ranger with the National Park Service, stationed in Yellowstone National Park. One of your current duties is to scout some of the park’s more obscure trails to look for signs of lost hikers, to detect any malfeasance, and to inspect the conditions of the trails. It is mid-September, and you’re inspecting one of the more remote trails in the Mount Washburn area to determine whether it should be closed for the season. When you first set out on your hike, the forecast called for only a slight chance of snow, but midway through your hike, an early fall blizzard struck. For a time you persisted on, but later you took refuge under a large lodgepole pine tree. ©McGraw-Hill Education. Example Situational Judgment Test Items: Park Ranger, 2 Although the storm is now abating, it is near dark. Which of the following would be your best course of action? • Stay put until help comes • Reverse course and hike back to the ranger station • Once the clouds clear, locate the North Star, and hike north to the nearest ranger station • Use your matches to build a fire, and hike back in the morning ©McGraw-Hill Education. Integrity Tests • Clear purpose / overt items – Do you think most people would cheat if they thought they could get away with it? – Do you believe a person has a right to steal from an employer if he or she is unfairly treated? • Personality-based/veiled purpose items – Would you rather go to a party than read a newspaper? – How often do you blush? • Scores appear to reflect conscientiousness, agreeableness, and emotional stability ©McGraw-Hill Education. Integrity Tests • Validity can be useful – Especially good at predicting counterproductive performance, like negative work behaviors – Generally good at predicting job performance, although there is some controversy regarding this issue • Why would these tests predict general performance? ©McGraw-Hill Education. Interest, Values, and Preference Inventories • Assess activities individuals prefer to do on & off the job; do not attempt to assess ability to do these • Not often used in selection • Can be useful for self-selection into job types • Types of tests – Strong Vocational Interest Blank (SVIB) – Myers-Briggs Type Inventory (MBTI) • Evaluation – Unlikely to predict job performance directly – May help assess person-organization fit & subsequent job satisfaction, commitment & turnover ©McGraw-Hill Education. Discussion Questions • Describe the similarities and differences between personality tests and integrity tests. When is each warranted in the selection process? • How would you advise an organization considering adopting a cognitive ability test for selection? ©McGraw-Hill Education. External Selection II Employment Interviews ©McGraw-Hill Education. Typical Unstructured Interviews • Relatively unplanned and “quick and dirty” • Questions based on interviewer “hunches” or “pet questions” to assess applicants • Casual, open-ended, or subjective questions • Often contains obtuse questions • Often contains highly speculative questions • Interviewer often unprepared • More potential for discrimination and bias • Validity typically r=.20 ©McGraw-Hill Education. • • • • • • • Structured Interviews Questions based on job analysis Same questions asked of each candidate Response to each question numerically evaluated Detailed anchored rating scales used to score each response Detailed notes taken, focusing on interviewees’ behaviors Validity may be r=.30 or better Training interviews improves validity ©McGraw-Hill Education. Types of Structured Interviews Situational • Assess applicant’s ability to project his / her behaviors to future situations. Experience-Based • Assess past behaviors that are linked to prospective job. • Assumes the person’s goals/intentions will predict future behavior • Assumes past performance will predict future performance ©McGraw-Hill Education. Conducting Structured Interviews • • • • • Consult job requirements matrix Develop the selection plan Develop structured interview plan Select and train interviewers Evaluate effectiveness KSAO Necessary for Selection Method of Assessment Ability to make customer feel welcome Yes Interview Knowledge of merchandise to be sold Yes Written test Knowledge of location of merchandise in store No None Skill in being cordial with customers Yes Interview Ability to create and convey ideas to customers Yes Interview ©McGraw-Hill Education. Discussion Questions • Describe the structured interview. • What are the characteristics of structured interviews that improve on the shortcomings of unstructured interviews? ©McGraw-Hill Education. External Selection II Selection for Team Environments ©McGraw-Hill Education. Selection for Team Environments • Types of teams – Problem-solving teams – Self-managed work teams – Cross-functional teams – Virtual teams • Establish steps for selection in team-based environments • Who should make the hiring decision? • Critical to ensure proper context is in place ©McGraw-Hill Education. Selection for Team Environments • Interpersonal KSAs – Conflict-Resolution KSAs – Collaborative Problem-Solving KSAs – Communication KSAs • Self-management KSAs – Goal-Setting and Performance Management KSAs – Planning and Task-Coordination KSAs ©McGraw-Hill Education. Evaluation of Substantive Assessment Methods, 1 Predictors Use Cost Reliability Validity Utility Applicant Reactions Adverse Impact Personality tests Low Low High Moderate ? Negative Low Ability tests Low Low High High High Negative High Emotional intelligence tests Moderate Low High Low ? ? Low Performance tests and work samples Moderate High High High High Positive Low Situational judgment tests Low High Moderate Moderate ? Positive Moderate ©McGraw-Hill Education. Evaluation of Substantive Assessment Methods, 2 Predictors Use Cost Reliability Validity Utility Applicant Adverse Reactions Impact Integrity tests Low Low High High High Negative Low Interest, values, and preference inventories Low Low High Low ? ? Low Structured interviews Moderate High Moderate High ? Positive Mixed Team assessments Low ? ? ? Positive ? ©McGraw-Hill Education. Moderate External Selection II Discretionary Assessment Methods ©McGraw-Hill Education Discretionary Assessment Methods • Used to separate people who receive job offers from list of finalists (assumes each finalist is considered fully qualified for position) • Often very subjective, relying heavily on intuition of decision maker • Factors other than KSAOs are evaluated – Assess person/organization match – Assess motivation level – Assess people on relevant organizational citizenship behaviors • Should involve organization’s staffing philosophy regarding EEO/AA commitments ©McGraw-Hill Education. Contingent Assessment Methods • “We offer you this job contingent upon ….” • Contingent methods not always used – Depends on nature of job and legal mandates • Might involve confirmation of – Drug test results – Medical exam results ©McGraw-Hill Education. Drug Testing • The average drug user – was 3.6 times more likely to be involved in an accident – received 3 times the average level of sick benefits – was 5 times more likely to file a workers’ compensation claim – missed 10 times as many work days as nonusers – 31% of all fatal truck accidents were due to alcohol or drugs • Drug testing has decreased in recent years because so few people test positive ©McGraw-Hill Education. Example of an Organizational Drug Testing Program Jump to Example of an Organizational Drug Testing Program, Appendix ©McGraw-Hill Education. Features of an Effective Drug Testing Program • Emphasize drug testing in safety-sensitive jobs • Use only reputable testing laboratories, and ensure that strict chain of custody is maintained. • Ask applicants for their consent, and inform them of test results • Use retesting to validate positive samples from the initial screening test • Ensure that proper procedures are followed to maintain the applicant’s right to privacy • Review the program and validate the results against relevant criteria (accidents, absenteeism, turnover, job performance); conduct a cost-benefit analysis ©McGraw-Hill Education. External Selection II Contingent Assessment Methods ©McGraw-Hill Education Medical Exams • Identify potential health risks in job candidates • Must ensure medical exams are required only when a compelling reason exists – Ensures people with disabilities unrelated to job performance are not screened out • Use is strictly regulated by ADA to ensure disabilities not job related are not screened out • Usually lack validity as procedures vary by doctor • Not always job related • Often emphasize short- rather than long-term health • New job-related medical standards are specific, job related, and valid ©McGraw-Hill Education. Discussion Questions • What are the most common discretionary and contingent assessment methods? • What are the similarities and differences between the use of these two methods? ©McGraw-Hill Education. External Selection II Legal Issues ©McGraw-Hill Education Uniform Guidelines on Employee Selection Procedures • General principles • Technical standards • Documentation of impact and validity evidence • Definitions • Makes substantial demands of a staffing system – Ensures awareness of possibility of adverse impact in employment decisions – If adverse impact is found, mechanisms provided to cope with it ©McGraw-Hill Education. Americans with Disabilities Act and Drug Testing • Selection under the Americans with Disabilities Act (ADA) – General principles – Access to job application process – Reasonable accommodation to testing – Medical examinations – Drug testing – UGESP • Drug testing is permitted to detect illegal drug use and discipline/termination if found is OK ©McGraw-Hill Education. Medical Exams • Identifies potential health risks in job candidates • Important to ensure medical exams are required only when a compelling reason exists – Ensures people with disabilities unrelated to job performance are not screened out • Use is strictly regulated by ADA • Lack validity as procedures vary by doctor • Not always job related • Often emphasizes short- rather than long-term health • New approach — Job-related medical standards ©McGraw-Hill Education. Discussion Questions • How should organizations apply the general principles of the UGESP to practical selection decisions? ©McGraw-Hill Education. Ethical Issues in Staffing • Issue 1 – Do you think it’s ethical for employers to select applicants on the basis of questions such as, “Dislike loud music” and “Enjoy wild flights of fantasy,” even if the scales that such items measure have been shown to predict job performance? Explain. • Issue 2 – Cognitive ability tests are one of the best predictors of job performance, yet they have substantial adverse impact against minorities. Do you think it’s fair to use such tests? Why or why not? ©McGraw-Hill Education. Staffing Organizations Chapter 10: Internal Selection ©McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education. Learning Objectives for Chapter 10 • Compare how the logic of prediction applies to internal vs. external selection decisions • Evaluate the relative advantages and disadvantages of the five initial assessment methods used in internal selection • Consider the merits and pitfalls of using seniority and experience for internal selection decisions • Describe the main features of assessment centers • Understand the advantages and disadvantages of using assessment centers for internal selection decisions • Evaluate the relative advantages and disadvantages of the seven substantive assessment methods used in internal selection ©McGraw-Hill Education. Internal Selection Preliminary Issues ©McGraw-Hill Education Preliminary Issues • Logic of prediction – indicators of internal applicants’ degree of success in past situations should be predictive of their likely success in new situations • Types of predictors – there is usually greater depth and relevance to the data available on internal candidates relative to external selection • Selection plan – important for internal selection to avoid the problems of favoritism and gut instinct that can be especially prevalent in internal selection ©McGraw-Hill Education. Logic of Prediction: Past Performance Predicts Future Performance Jump to Logic of Prediction: Past Performance Predicts Future Performance, Appendix ©McGraw-Hill Education. Preliminary Issues • Logic of prediction – indicators of internal applicants’ degree of success in past situations should be predictive of their likely success in new situations • Types of predictors – there is usually greater depth and relevance to the data available on internal candidates relative to external selection • Selection plan – important for internal selection to avoid the problems of favoritism and gut instinct that can be especially prevalent in internal selection • Advantages of internal over external selection – Greater depth and relevance of data available on internal candidates – Greater emphasis can be placed on samples and criteria rather than signs ©McGraw-Hill Education. Discussion Question • Explain how internal selection decisions differ from external selection decisions. ©McGraw-Hill Education. Internal Selection Initial Assessment Methods ©McGraw-Hill Education Talent Management/Succession Systems • Keep ongoing records of skills, talents, and capabilities of employees • Primary goal is to facilitate internal selection systems through up-to-date, accurate records on employees • Potential uses – Performance management – Recruitment needs analysis – Employee development – Compensation and career management ©McGraw-Hill Education. Peer Assessments • Methods include peer ratings, peer nominations, peer rankings • Strengths – Rely on raters who presumably are knowledgeable of applicants’ KSAOs – Peers more likely to view decisions as fair due to their input • Weaknesses – May encourage friendship bias – Criteria involved in assessments are not always clear ©McGraw-Hill Education. Initial Assessment Methods • Self-assessments – Job incumbents asked to evaluate own skills to determine promotability • Managerial sponsorship – Higher-ups given considerable influence in promotion decisions • Informal discussions and recommendations – May be suspect in terms of relevance to actual job performance ©McGraw-Hill Education. Employee Advocates • Coach – Provides day-to-day feedback – Diagnoses and resolves performance problems – Creates opportunities for employees using existing training programs and career development programs • Sponsor – Actively promotes person for advancement opportunities – Guides person’s career rather than simply informing them of opportunities – Creates opportunities for people in decision-making capacities to see the skills of the employee (e.g., lead a task force) • Mentor – Becomes personally responsible for the success of the person – Is available to person on and off the job – Lets person in on “insider” information – Solicits and values person’s input ©McGraw-Hill Education. Evaluation of Initial Assessment Methods Predictor Use Cost Reliability Validity Utility Applicant reactions Adverse Impact Self-nominations Low Low Moderate Moderate ? Mixed ? Talent management/ succession systems High High Moderate Moderate ? ? ? Peer assessments Low Low High High ? Negative ? Managerial sponsorship Low Moderate ? ? ? Positive ? Informal methods High Low ? ? ? Mixed ? ©McGraw-Hill Education. Discussion Questions • What are the differences among peer ratings, peer nominations, and peer rankings? ©McGraw-Hill Education. Internal Selection Substantive Assessment Methods ©McGraw-Hill Education Substantive Assessment Methods • Seniority and experience • Job knowledge tests • Performance appraisal • Promotability ratings • Assessment centers • Interview simulations • Promotion panels and review boards ©McGraw-Hill Education. Overview of Seniority and Experience • Seniority – Length of service with organization, department, or job • Experience – Not only length of service but also kinds of activities an employee has undertaken • Why so widely used? – Direct experience in a job content area reflects an accumulated stock of KSAOs necessary to perform job – Information is easily and cheaply obtained – Protects employee from capricious treatment and favoritism – Promoting senior or experienced employees is socially acceptable -viewed as rewarding loyalty ©McGraw-Hill Education. Evaluation of Seniority and Experience • Employees typically expect promotions will go to most senior or experienced employee • Relationship to job performance – Seniority is unrelated to job performance – Experience is moderately related to job performance, especially in the short run • Experience is superior because it is: – a more valid method than seniority – more likely to be content valid when past or present jobs are similar to the future job • Experience is unlikely to remedy initial performance difficulties of low-ability employees – is better suited to predict short-term rather than long-term potential ©McGraw-Hill Education. Job Knowledge Tests • Job knowledge includes elements of both ability and seniority • Measured by a paper-and-pencil test or a computer • Holds great promise as a predictor of job performance – Reflects an assessment of what was learned with experience – Also captures cognitive ability ©McGraw-Hill Education. Performance Appraisal • A possible predictor of future job performance is past job performance collected by a performance appraisal process • Advantages – Readily available – Probably capture both ability and motivation • Weaknesses – Potential lack of a direct correspondence between requirements of current job and requirements of position applied for – “Peter Principle” ©McGraw-Hill Education. Performance Appraisal • Questions to Ask in Using Performance Appraisal as a Method of Internal Staffing Decisions – Is the performance appraisal process reliable and unbiased? – Is present job content representative of future job content? – Have the KSAOs required for performance in the future job(s) been acquired and demonstrated in the previous job(s)? – Is the organizational or job environment stable such that what led to past job success will lead to future job success? ©McGraw-Hill Education. Promotability Ratings • Assessing promotability involves determining an applicant’s potential for higher-level jobs – Promotability ratings often conducted along with performance appraisals • Useful for both selection and recruitment • Caveat – When receiving separate evaluations for purposes of appraisal, promotability, and pay, an employee may receive mixed messages ©McGraw-Hill Education. Overview of Assessment Centers • Elaborate method of employee selection • Involves using a collection of predictors to forecast success, primarily in higher-level jobs • Objective – Predict an individual’s behavior and effectiveness in critical roles, usually managerial • Incorporates multiple methods of assessing multiple KSAOs using multiple assessors ©McGraw-Hill Education. Sample Assessment Center Rating Form Participants take part in several exercises over multiple days • In-basket exercise • Leaderless group discussion • Case analysis • Trained assessors evaluate participants’ performance ©McGraw-Hill Education. Participants Characteristics of Assessment Centers • Participants are usually managers being assessed for higher-level managerial jobs • Participants are evaluated by assessors at conclusion of program ©McGraw-Hill Education. Evaluation of Assessment Centers • Validity – Average validity → ŕ = .37 – Validity is higher when • Multiple predictors are used • Assessors are psychologists rather than managers • Peer evaluations are used – Possess incremental validity in predicting performance and promotability beyond personality traits and cognitive ability tests • Research results – “Crown prince/princess” syndrome – Participant reactions ©McGraw-Hill Education. Other Substantive Assessment Methods • Interview simulations – Role-play: candidate must play work related role with interviewer – Fact finding: candidate needs to solicit information to evaluate an incomplete case – Oral presentations: candidate must prepare and make an oral presentation on assigned topic • Promotion panels and review boards: use multiple raters, which can improve reliability and can broaden commitment to decisions reached ©McGraw-Hill Education. Evaluation of Substantive Assessment Methods, 1 Predictors Use Cost Reliability Validity Utility Applicant Adverse Reactions Impact Seniority High Low High Low ? ? High Experience High Low High Moderate High Positive Mixed Job knowledge tests Low Moderate High High ? ? ? Performance appraisal Moderate Moderate ? Moderate ? ? ? Promotability ratings Low Low High High ? ? ? Assessment center Low High High High High ? ? ©McGraw-Hill Education. Evaluation of Substantive Assessment Methods, 2 Predictors Use Cost Reliability Validity Utility Applicant Reactions Adverse Impact In-basket exercise Low Moderate Moderate Moderate High Mixed Mixed Leaderless group discussion Low Low Moderate Moderate ? ? ? Case analysis Low Low ? Moderate ? ? ? Global assignments High Moderate ? ? ? ? ? Interview simulations Low Low ? ? ? ? ? Panels and review boards Low ? ? ? ? ? ? ©McGraw-Hill Education. Discussion Questions • Explain the theory behind assessment centers. • Describe the three different types of interview simulations. • Evaluate the effectiveness of seniority, assessment centers, and job knowledge as substantive internal selection procedures. ©McGraw-Hill Education. Internal Selection Discretionary Assessment Methods ©McGraw-Hill Education Discretionary Assessment Methods • Narrows list of finalists to those who will receive job offers • Decisions often made on basis of – Organizational citizenship behavior and – Staffing philosophy regarding EE0 / AA • Differences from external selection – Previous finalists not receiving job offers do not simply disappear – Multiple assessors generally used ©McGraw-Hill Education. Internal Selection Legal Issues ©McGraw-Hill Education Legal Issues • Uniform Guidelines on Employee Selection Procedures (UGESP) • Shattering the glass ceiling – Employ greater use of selection plans – Minimize use of casual, subjective methods and use formal, standardized, job-related assessment methods – Implement programs to convey KSAOs necessary for advancement to aspiring employees ©McGraw-Hill Education. Discussion Questions • What steps should be taken by an organization that is committed to shattering the glass ceiling? ©McGraw-Hill Education. Ethical Issues in Staffing • Issue 1 – Given that seniority is not a particularly valid predictor of job performance, do you think it’s unethical for a company to use it as a basis for promotion? Why or why not? • Issue 2 – Vincent and Peter are both sales associates, and are up for promotion to sales manager. In the last five years, on a 1=poor to 5=excellent scale, Vincent’s average performance rating was 4.7 and Peter’s was 4.2. In an assessment center that was meant to simulate the job of sales manager, on a 1=very poor to 10=outstanding scale, Vincent’s average score was 8.2 and Peter’s was 9.2. Assuming everything else is equal, who should be promoted? Why? ©McGraw-Hill Education. Staffing Organizations Chapter 11: Decision Making ©McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education. Learning Objectives for Chapter 11 • Be able to interpret validity coefficients • Estimate adverse impact and utility of selection systems • Learn about methods for combining multiple predictors • Establish hiring standards and cut scores • Evaluate various methods of making a final selection choice • Understand the roles of various decision makers in the staffing process • Recognize the importance of diversity concerns in the staffing process ©McGraw-Hill Education. Decision Making Choice of Assessment Method ©McGraw-Hill Education Validity Coefficient and Correlations • Relationship between predictor and criterion scores • Measured through correlations – Practical significance • Sign is positive versus negative • Magnitude ranges from -1 to +1; zero means no relationship – Statistical significance • Likelihood that other samples will get the same result • Correlation with other predictors – Find a battery of multiple predictors with minimal correlations – Total validity can be assessed with multiple regression ©McGraw-Hill Education. Adverse Impact Should use predictor with highest validity • Best success in predicting performance Should use predictor with lowest adverse impact • Create a workforce that is representative • Candidates selected on individual characteristics, not group membership • Consistent with EEO/AA and diversity philosophy of the organization • Usually can be defended in court • Minimize chances of lawsuits ©McGraw-Hill Education. Hiring Success Gain • Selection ratio – Number hired divided by number of applicants – High selection ratio means nearly every applicant must be hired – Low selection ratio means the organization can be more selective • Base rate – Number of successful employees divided by number of employees – Indicates how difficult the job is—higher base rate means easier job • Taylor-Russel Tables – Combine information on selection ratios, base rates, and validity – Conclusion is that selection tools are most valuable when the selection ratio is low, the base rate is low, and validity coefficient is high ©McGraw-Hill Education. Taylor-Russell Tables Base rate = 0.30 Validity Selection Ratio: 0.10 Selection Ratio: 0.70 0.20 43 percent 33 0.60 77 40 Base rate = 0.80 ©McGraw-Hill Education. Validity Selection Ratio: 0.10 Selection Ratio: 0.70 0.20 89 percent 83 0.60 99 90 Economic Gain Technique Utility analysis Predictive analytics Kano analysis ©McGraw-Hill Education. Sources of information Data on predictor validity, applicant test scores, and estimated dollar value of performance variability Historical information on performance outcomes for business units Line manager and director descriptions of strategic impact of performance across domains What is evaluated? Expected value of improved job performance if a new selection tool is implemented Contribution of different characteristics of the workforce to performance outcomes Changes in economic performance from enhanced levels of different types of employee skills Links to other areas Line manager judgments of employee value; expected financial returns for investing in selection Existing “hard” data from organizational records for valued outcomes Tool from marketing, manager judgments regarding critical competencies are incorporated Discussion Question • Your boss is considering using a new predictor. The base rate is high, the selection ratio is low, and the validity coefficient is high for the current predictor. What would you advise your boss and why? ©McGraw-Hill Education. Decision Making Determining Assessment Scores ©McGraw-Hill Education Determining Assessment Scores • Single predictor – Simple and fast – Does not capture many candidate qualifications • Multiple predictors – More complicated and time consuming – More complete picture of the candidates ©McGraw-Hill Education. Multiple Predictor Methods • Compensatory model – Adds all scores together into a single number – Can be done through informal “clinical” weighting, unit weighting, rational weighting, or regression weighting • Multiple hurdles model – Uses selection tools in order from cheapest to most expensive – Cuts candidates at each stage – Results similar to compensatory model, but costs are much lower ©McGraw-Hill Education. Combining Multiple Hurdle and Compensatory Models Jump to Combining Multiple Hurdle and Compensatory Models, Appendix ©McGraw-Hill Education. Selecting the Best Weighting Scheme • Do decision makers have considerable experience and insight into selection decisions? • Is managerial acceptance of the selection process important? • Is there reason to believe each predictor contributes relatively equally to job success? • Are there adequate resources to use involved weighting schemes? • Are conditions under which multiple regression is superior satisfied? ©McGraw-Hill Education. Discussion Questions • Under what circumstances should a compensatory model be used? • When should a multiple hurdles model be used? ©McGraw-Hill Education. Decision Making Hiring Standards and Cut Scores ©McGraw-Hill Education Consequences of Cut Scores, 1 • Issue — What is a passing score? – Score may be a • Single score from a single predictor or • Total score from multiple predictors • Description of process – Cut score – Separates applicants who advance from those who are rejected ©McGraw-Hill Education. Consequences of Cut Scores, 2 Jump to Consequences of Cut Scores, Appendix ©McGraw-Hill Education. Methods to Determine Cut Scores • Minimum competency – set on the basis of the minimum qualifications deemed necessary to perform the job • Top-down – examine the distribution of predictor scores for applicants and then determine which proportion of applicants will be hired • Banding – applicants who score within a certain score range or band are considered to have scored equivalently ©McGraw-Hill Education. Discussion Questions • What are the positive consequences associated with a high predictor cut score? What are the negative consequences? ©McGraw-Hill Education. Decision Making Methods of Final Choice ©McGraw-Hill Education Methods of Final Choice, 1 • Random selection – Each finalist has equal chance of being selected • Ranking – Finalists are ordered from most to least desirable based on results of discretionary assessments • Grouping – Finalists are banded together into rank-ordered categories • Ongoing hiring – Hiring all acceptable candidates as they become available for open positions ©McGraw-Hill Education. Methods of Final Choice, 2 Jump to Methods of Final Choice, 2, Appendix ©McGraw-Hill Education. Discussion Question • What are the advantages of ranking as a method of final choice over random selection? ©McGraw-Hill Education Decision Making Decision Makers ©McGraw-Hill Education Decision Makers • Organizational leaders – Uniquely valuable, holistic understanding of the purpose of a selection system. – Buy-in enhances the success of any policy initiative • Human Resource Professionals – Technical expertise needed to develop sound selection decisions – Access to quantitative information from HR information systems that can be used to quantify predictor-outcome relationships • Line managers – Accountable for the success of the people hired – Identify critical needs in the selection system that might not be addressed • Coworkers – Select members compatible with the goals of the work team ©McGraw-Hill Education. Decision Makers in Selection Organizational leaders: guiding principles and strategic goals HR professionals: policy and technical expertise; data analysis Line managers: policy implementation; operational expertise Co-workers: understand fit with the work group Jump to Decision Makers in Selection, Appendix ©McGraw-Hill Education. Discussion Questions • What roles should HR professionals play in staffing decisions? Why? ©McGraw-Hill Education. Decision Making Legal Issues ©McGraw-Hill Education Legal Issues • Legal issue of importance in decision making – Cut scores or hiring standards • Uniform Guidelines on Employee Selection Procedures (UGESP) – If no adverse impact, guidelines are silent on cut scores – If adverse impact occurs, guidelines become applicable • Choices among finalists ©McGraw-Hill Education. Discussion Questions • What guidelines do the UGESP offer to organizations when it comes to setting cut scores? ©McGraw-Hill Education. Ethical Issues in Staffing • Issue 1 – Do you think companies should use banding in selection decisions? Defend your position. • Issue 2 – Is clinical prediction the fairest way to combine assessment information about job applicants, or are the other methods (unit weighting, rational weighting, multiple regression) more fair? Why? ©McGraw-Hill Education. Staffing Organizations Chapter 13: Staffing System Management ©McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education. Learning Objectives for Chapter 13 • Recognize the importance of effective policies and procedures for staffing • Understand the importance of concrete, fair policies and procedures in selection • Evaluate the advantages and disadvantages of outsourcing staffing processes • Understand how to evaluate the various results of staffing processes • Develop metrics for the measurement of staffing systems • Recognize the legal issues involving record keeping and applicant/employee privacy • Plan for effective dispute resolution ©McGraw-Hill Education. Staffing System Management Design and Administration of Staffing Systems ©McGraw-Hill Education Defining the Mission for Staffing • Taking a systematic, integrative view of HR practices has been consistently shown to enhance organizational performance – Coordinate with the compensation and benefits group in developing policies on the economic components of job offers, such as starting pay, hiring bonuses, and special perks – Coordinate with the training and development function to identify training needs for external, entry-level new hires and to plan transfer and promotion-enhancing training experiences for current employees – Determine how policies and practices will be combined with corporate communications and other programs to improve employee morale and motivation ©McGraw-Hill Education. Organizational Arrangements, 1 • How the organization structures itself to conduct HR and staffing activities • Derived from the goals in strategy and culture – Hierarchical system incorporates a greater degree of centralized authority to maintain control – Participative culture matched with devolving staffing choices to individual managers • Organization size and complexity determine degree of centralization ©McGraw-Hill Education. Organizational Arrangements, 2 Hierarchical Staffing System Top Management Team: Develop Organizational Strategy and Goals Chief Human Resources Officer: Develop staffing policies, procedures, and evaluation criteria Director of Operations: Develop production systems and evaluate performance of plants Talent Management Director: Train and monitor HR staff, coordinate staffing operations Site Manager: Oversee site operations, directs coordination across shifts, evaluate site performance Human Resource Representatives: Implement recruiting drives, interview applicants Line manager: Oversee performance of shifts, review applicants cleared by HR, and make hiring decisions Jump to Organizational Arrangements, 2, Appendix, 1 ©McGraw-Hill Education. Participative Staffing System Top Management Team: Develop Organizational Strategy and Goals Talent Management Team: Develop recruiting portals, send applicant files to project team, discuss with project team Project Team: Review applicant files against project requirements, meet with all applicants, discuss with talent management team Jump to Organizational Arrangements, 2, Appendix, 2 Creating and Implementing Policies and Procedures • A policy is a selected course or guiding principle • A procedure is a prescribed routine or way of acting in similar situations • Enhance the perceived justice of staffing activities – Based on facts rather than social influence or personal biases – Decision-making criteria are clearly communicated – The process is consistently followed across all affected individuals. • Employee perceptions of organizational justice linked to – Intention to pursue a job in recruitment – Intention to accept a job in selection – Increased satisfaction and commitment in job assignments – Decreased intention to sue a former employer following layoffs ©McGraw-Hill Education. Creating Effective Staffing Policies and Procedures • Stage 1: Determine the overarching HR strategy and priorities that guide all policies and procedures • Stage 2: Define specific objectives for staffing policies and procedures • Stage 3: Communicate policies and procedures to all employees and ensure their implementation • Stage 4: Evaluate and revise existing policies and procedures ©McGraw-Hill Education. Human Resource Information Systems • Staffing activities generate considerable information • Small organizations still use paper-based forms, but increasingly have access to HRIS programs and web-based applications • Increased use of HRIS means – Increased accountability for HR activities – Ability to streamline processes ©McGraw-Hill Education. Human Resource Information Systems Staffing Task HRIS Functionality Legal compliance EEO data analysis and reports Policy and procedure writing guides Statistical analysis for job relatedness Planning Tracking historical demand for employees Forecasting workforce supply Replacement and succession planning Job analysis Database of job titles and responsibilities Database of competencies Comparing job descriptions with O*Net External recruitment and selection Job posting reports Time-to-fill hiring requisitions Applicant logs and status Recruitment source effectiveness Electronic résumé routing New hire reports Validation of selection systems ©McGraw-Hill Education. Human Resource Information Systems Staffing Task HRIS Functionality Internal recruitment and selection Employee succession planning Intranet for job postings Skills databases Tracking assessment center progress Job performance reports Individual development plans Final match Tracking job acceptance rates Contract development Tracking employee socialization Staffing system management System cost reports Return on investments Record-keeping functions Retention Collection and analysis of satisfaction data Rates of turnover across locations and time Performance management and/or progressive discipline ©McGraw-Hill Education. Outsourcing • Refers to contracting out work to a vendor or thirdparty administrator • Outsourcing of HR functions is increasing • Types of staffing activities outsourced – Use of temporary employees, executive search, drug testing, skill testing, background checks, job fairs, employee relocation, assessment centers, and affirmative action planning • Strategic and operating reasons to outsource – Expertise, flexibility, time savings, service quality, reduction of legal liability, and cost reduction ©McGraw-Hill Education. Outsourcing Outsourced In-House Strategy Functions not linked to core competencies Functions linked to core competencies Size Small organizations, no centralized HR, continual hiring needs Large organizations with economies of scale or when organizational knowledge is crucial Skills required General human capital Examples ©McGraw-Hill Education. • Recruiting in a small warehouse • Screening nurses in a longterm care facility • Developing a website for screening entry-level candidates • Providing temporary employees for a cyclical manufacturing organization Firm-specific human capital or specific personality traits • Recruiting creative talent for an advertising firm • Selecting the organization’s executive team • Providing employee orientation • Recruiting and selection for a large retail organization • Recruiting and selecting for an interdependent work team Discussion Questions • What are the advantages of having a centralized staffing function, as opposed to letting each manager be totally responsible for all staffing activities in his or her unit? • What are examples of staffing tasks and activities that cannot or should not be simply delegated to a staffing information system for their conduct? • What would be the advantages and disadvantages of outsourcing the entire staffing system to a vendor? ©McGraw-Hill Education. Staffing System Management Evaluation of Staffing Systems ©McGraw-Hill Education Staffing Process • Concept – Establishes and governs the flow of employees into, within, and out of the organization • Reasons to use a well-planned staffing system – Ensures same KSAO information is gathered from all applicants – Ensures all applicants receive same information – Enhance applicants’ perceptions of procedural fairness of staffing system and decisions – Less likely to generate legal challenges by applicants – Provides a clear picture of where deviations have occurred ©McGraw-Hill Education. Staffing Process Results • Quantitative indicators indicate effectiveness and efficiency of staffing system – Provide objective, “bottom line” results – Useful for comparative purposes • Split sample techniques • Longitudinal analysis • Compare to benchmarks Collect and synthesize objectives Develop metrics that assess these objectives Compile, analyze, and evaluate metrics Communicate to top management Jump to Staffing Process Results, Appendix ©McGraw-Hill Education. Common Staffing Metrics Cost Timeliness Outcomes Reactions Staffing system Staffing budget Staff-to-employee ratios Time to respond to requests Employee readiness for strategic goals Communication Satisfaction with services Recruiting Advertising expenses Cost per applicant Recruits per week Number of recruits Applicant quality Selection Test costs per candidate Interview expenses Time to hire Days to fill Competence Workforce diversity Candidate quality Satisfaction with tests Final match Training cost per hire Cost per hire Days to start Time to perform Number of positions filled Job performance New employee satisfaction Retention Exit interview expenses Replacement costs Timely response to external offers Voluntary separation rate Involuntary separation rate Employee job satisfaction ©McGraw-Hill Education. Calculating Staffing Metrics • Number of positions filled – count of the number of individuals who accepted positions during the fiscal year. • Time-to-fill openings – the number of days it takes for a job requisition to result in a job acceptance by a candidate. • Hiring cost estimates – sum of advertising, agency fees, employee referrals, travel costs for applicants and staff, relocation costs, and pay and benefits for recruiters • Staffing cost or efficiency ratio – total staffing costs/total compensation recruited ©McGraw-Hill Education. Discussion Questions • In developing a report on the effectiveness of the staffing process being conducted for entry-level jobs, what factors would you address and why? ©McGraw-Hill Education. Staffing System Management Legal Issues ©McGraw-Hill Education Record Keeping, Privacy, and Reports • • • • • • • • • Applications for employment (hire, promote, or transfer) Reasons for refusal to hire, promote, or transfer Tests and test scores, plus other KSAO information Job orders submitted to labor unions and employment agencies Medical exam results Advertisements or other notices to the public or employees about job openings and promotion opportunities Requests for reasonable accommodation Impact of staffing decisions on protected groups (adverse impact statistics) Records related to filing of a discrimination charge ©McGraw-Hill Education. Dispute Resolution • Negotiation – Discuss complaint with goal of resolving it • Fact finding – Neutral person investigates complaint • Peer review – Employees and managers work together in a panel • Mediation – Neutral person helps to find a solution • Arbitration – Neutral person makes a decision binding on the parties ©McGraw-Hill Education. Discussion Questions • How would you try to get individual managers to be more aware of the legal requirements of staffing systems and to take steps to ensure that they themselves engage in legal staffing actions? ©McGraw-Hill Education. Ethical Issues in Staffing • Issue 1 – It has been suggested that the use of staffing technology and software is wrong because it dehumanizes the staffing experience, making it nothing but a mechanical process that treats applicants like digital widgets. Evaluate this assertion. • Issue 2 – Since there are no standard ways of creating staffing process results and cost metrics, is there a need for some sort of oversight of how these data are calculated, reported, and used within an organization? Explain. ©McGraw-Hill Education. Staffing Organizations Chapter 14: Retention Management ©McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education. Learning Objectives for Chapter 14 • Be able to differentiate among the types and causes of employee turnover • Recognize the different reasons employees leave their jobs • Evaluate the costs and benefits of turnover • Learn about the variety of techniques companies use to limit turnover • See how performance management and progressive discipline limit discharge turnover • Understand how companies manage downsizing • Recognize a variety of legal issues that affect separation policies and practices ©McGraw-Hill Education. Retention Management Turnover and Its Causes ©McGraw-Hill Education Turnover and Its Causes • Nature of the problem – Turnover can result in loss of KSAOs identified in recruiting and selection – Turnover can be beneficial if low KSAO employees depart • Major types of turnover – Voluntary • Avoidable • Unavoidable – Involuntary • Discharge • Downsizing ©McGraw-Hill Education. Types of Voluntary Employee Turnover, 1 Avoidable Try to Prevent • High performance • Strong KSAOs • Valued intellectual capital • High promotion potential • High training investment • High Experience • Difficult to find replacement ©McGraw-Hill Education. Unavoidable Do Not Prevent • • • • Low performance Weak KSAOs Little intellectual capital Low promotion potential • Low training investment • Low Experience • Easy to find replacement Cannot Prevent • • • • • • • • • Retirement Dual career New career Health Child care or pregnancy Elder care Return to school Leave country Take a Break Types of Involuntary Employee Turnover • Discharge – Employee cannot perform core job tasks – Employee behavior violates policies, procedures, or even laws • Downsizing – Position is eliminated, so employees must leave – May include high and low performing employees ©McGraw-Hill Education. Discharge • Discipline • Poor performance Downsizing • Permanent layoff • Temporary layoff • Site or plant closing, relocation • Redundancy due to a merger or acquisition Types of Voluntary Employee Turnover, 2 Jump to Types of Voluntary Employee Turnover, 2, Appendix ©McGraw-Hill Education. Retention Management Analysis of Turnover ©McGraw-Hill Education Turnover Benchmarks: Job Openings and Labor Turnover Survey Data Hire rates Total separations rates Construction 60.6 Manufacturing Retail trade Finance and insurance Healthcare and social assistance Accommodation & food services State and local education ©McGraw-Hill Education. Quit rates Layoff and discharge rates Other separations rates 56.1 21.5 32.0 3.8 25.7 25.5 13.3 10.0 2.6 58.1 56.2 35.0 15.5 5.7 26.3 24.5 13.5 6.9 4.1 34.2 30.8 21.0 7.2 2.6 74.4 72.1 50.3 19.5 2.3 17.5 16.9 8.6 5.6 2.8 Reasons for Leaving: Self Report • Exit interviews – Formally planned discussions with departing employees – Should involve a structured format, conducted with someone neutral (not the employee’s manager) who has been trained in how to conduct interviews • Post-exit surveys – Written reports using scales administered after departure – Less expensive than interviews • Satisfaction surveys – Attempt to assess intention to leave before turnover can occur ©McGraw-Hill Education. Reasons for Leaving: Predictive Analytics • Rationale – Former employees may give guarded or inaccurate responses in exit interviews – Employees may not have insight into how they would behave differently (stay or leave) if the organization changed policies • Methods for predictive analytics – Breakouts and benchmarks across locations – Multiple regression analysis incorporating many predictors of turnover ©McGraw-Hill Education. Example Turnover Breakout Results Annual Turnover Rate 35% 21% 13% Experience level Less than three years Three to five years More than five years Department Customer service Sales Marketing Product development Administrative support 45% 36% 13% 11% 14% Survey data Low organizational commitment Moderate organizational commitment High organizational commitment 49% 15% 8% ©McGraw-Hill Education. Voluntary Turnover: Costs and Benefits • Separation Costs – Financial Costs • HR staff time (e.g., exit interview, payroll, benefits) • Manager’s time (e.g., retention attempts, exit interview) • Accrued paid time off (e.g., vacation, sick pay) • Temporary coverage (e.g., temporary employee, overtime pay for current employees) – Other Costs • Production and customer service delays or quality decreases • Lost or unacquired clients • Employee goes to competitor or forms competitive business • Contagion—other employees decide to leave • Teamwork disruptions • Loss of workforce diversity ©McGraw-Hill Education. Voluntary Turnover: Costs and Benefits • Replacement Costs – Staffing costs for new hire (e.g., cost-per-hire calculations) – Hiring inducements (e.g., bonus, relocation, perks) – Hiring manager and work-unit employee time – Orientation program time and materials – HR staff induction costs (e.g., payroll, benefits enrollment) • Training Costs – Formal training (trainee and instruction time, materials, equipment) – On-the-job training (supervisor and employee time) – Mentoring (mentor’s time) – Socialization (time of other employees, travel) – Productivity loss (loss of production until full proficient employee) ©McGraw-Hill Education. Voluntary Turnover: Costs and Benefits • Benefits – Replacement employee better performer and organization citizen than last employee – New KSAO and motivation infusion to organization – Opportunity to restructure work unit – Savings from not replacing employee – Vacancy creates transfer or promotion opportunity for others Replacement less expensive in salary and seniority-based benefits ©McGraw-Hill Education. Discharge: Cost and Benefits • Separation Costs – Financial Costs • Same as for voluntary turnover plus possible contract buyout (salary, benefits, perks) – Other Costs • Manager and HR staff time handling problem employee • Grievance, alternative dispute resolution • Possibility of lawsuit, loss of lawsuit, settlement or remedy • Damage to labor–management relations • Replacement and Training Costs – Same as for voluntary turnover • Benefits – Departure of low-value employee – High-value employee replacement possibility – Reduced disruption for manager and work unit • Improved performance management and disciplinary skills ©McGraw-Hill Education. Downsizing: Cost and Benefits • • Financial Costs – HR staff time in planning and implementing layoff – Managers’ time in handling layoff – Accrued paid time off (e.g., vacation, sick pay) – Early retirement package – Severance packages – Contract buyouts for fulfillment of guarantees – Higher unemployment insurance premiums – Change in control (CIC) guarantees for key executives during a merger or acquisition Other Costs – Shareholder value (stock price) may not improve – Loss of critical employees and KSAOs – Inability to respond quickly to surges in product and service demand; restaffing delays and costs – Contagion—other employees leave – Threat to harmonious labor–management relations – Possibility of lawsuit, loss of lawsuit, costly settlement or remedy – Decreased morale, increased feelings of job insecurity – Difficulty in attracting new employees ©McGraw-Hill Education. Downsizing: Cost and Benefits • Benefits – Lower payroll and benefits costs – Increased production and staffing flexibility – Ability to relocate facilities – Improved promotion and transfer opportunities for stayers – Focus on core businesses, eliminate peripheral ones – Spread risk by outsourcing activities to other organizations – Flatten organization hierarchy—especially among managers – Increase productivity ©McGraw-Hill Education. Discussion Questions • Which of the costs and benefits of voluntary turnover are most likely to vary according to type of job? Give examples. ©McGraw-Hill Education. Retention Management Retention Initiatives: Voluntary Turnover ©McGraw-Hill Education Desirability of Leaving: Extrinsic Rewards • Make rewards meaningful and unique • Provide fair reward allocation systems – Rational basis for reward decisions – Employees know how the system works • Link rewards to retention behaviors – Provide vacation, career advancement, and security for long-tenured employees – Increase compensation over time • Link rewards to performance – Facilitates retention of high performers ©McGraw-Hill Education. Desirability of Leaving: Intrinsic Rewards • Create work characteristics that meet employee preferences – Produce something meaningful – Have varied and interesting tasks • Provide employees with organizational support – Adequate and honest information from the organization – Development opportunities • Ensure supervisors and coworkers provide a positive social environment – Frequent and constructive communication – Minimize abusive supervision • Enhance work/life balance ©McGraw-Hill Education. Ease of Leaving and Alternatives • Organization-specific training and development – Enhance KSAOs that are most useful in the current job – Replacement and succession plans linked to organization-specific skills • Increased cost of leaving – Retention bonuses – Locate facilities in places with few other employers • Internal staffing – Highlight options within the same company if employees don’t like their current jobs • Respond to external offers ©McGraw-Hill Education. Most and Least Effective Retention Initiatives • Most Effective Retention Initiatives – Retention bundles – Benefits – Dispute resolution – Participation-enhancing work design • Least Effective Retention Initiatives – Relative pay – Sophisticated selection system – Variable pay – Training ©McGraw-Hill Education. Review of Organizational Practices • Individual practices in isolation aren’t as powerful as systems of practices – Rewards for performance matched with wide communication reduce turnover of high performers – Neither rewards nor communication are especially effective in isolation • Integrated systems include careful selection, adequate training, satisfying conditions, and rewards for retention ©McGraw-Hill Education. Discussion Questions • For the three primary causes of voluntary turnover (desirability of leaving, ease of leaving, alternatives), might their relative importance depend on the type of employee or type of job? Explain. • If someone said to you, “It’s easy to reduce turnover—just pay people more money,” what would your response be? ©McGraw-Hill Education. Retention Management Retention Initiatives: Discharge ©McGraw-Hill Education Performance Management Process, 1 Jump to Performance Management Process, 1, Appendix ©McGraw-Hill Education. Performance Management Process, 2 • Work with employees to minimize need for involuntary turnover • Document performance problems in advance, with clear consequences communicated • Critical steps – Identify performance problems – Assess cause – Develop corrective actions – Develop and discuss clear consequences for continued problems – Document incident, corrective actions, and consequences of continued problems – Terminate if problems not resolved ©McGraw-Hill Education. Discussion Questions • Why should an organization seek to retain employees with performance or discipline problems? Why not just fire them? ©McGraw-Hill Education. Retention Management Retention Initiatives: Downsizing ©McGraw-Hill Education Retention Initiatives: Downsizing • Alternatives to downsizing – No-layoff strategies • Retaining and motivating those who remain – Attrition (not replacing those who leave) – Communicate downsizing decisions clearly – Hiring freezes – Involve the current workforce in redesigning jobs – Non-renewal of contract workers – Salary reduction – Early retirement ©McGraw-Hill Education. – Provide job search assistance Discussion Questions • Discuss some potential problems with downsizing as an organizations’ first response to a need to cut labor costs. ©McGraw-Hill Education. Retention Management Retention Initiatives: Legal Issues ©McGraw-Hill Education Separation Laws and Regulations • Public policy restrictions on employment at will • Employment discrimination laws • Employment contract principles • Labor contracts • Advance warnings • Severance agreements ©McGraw-Hill Education. Legal Issues in Performance Appraisal • Criteria should be job related, specific, and communicated in advance • Manager should be competent in rating performance relative to job requirements • Multiple raters should be used • Ratings must be documented • Ratings should be frequent • Appeals systems should be in place ©McGraw-Hill Education. Ethical Issues in Staffing • Imagine your organization is doing exit interviews and has promised confidentiality to all who respond. You are responsible for conducting the exit interviews. Your supervisor has asked you to give her the name of each respondent so she can assess the information in conjunction with the person’s supervisor. What obligations do corporate HR employee have to keep information confidential in such circumstances? • Firing an employee has numerous potential negative organizational consequences, including the discomfort of the supervisor who delivers the termination information, conflict or sabotage from the departing employee, and the filing of a lawsuit. To avoid this, many supervisors give problem employees unpleasant work tasks, reduce their working hours, or otherwise negatively modify their jobs in hopes that they will simply quit. What are the ethical issues raised by this strategy? ©McGraw-Hill Education.


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