Hiring Decisions MANA 4328 Dennis C. Veit

Selection process Personnel Selection The process Organizations use to make decisions about who will or will not be allowed to join the team!

Steps in the Selection Process 1. Screening Applications and Resumes 2. Testing and Reviewing Work Samples 3. Interviewing Candidates 4. Checking References and Background 5. Making a Selection

Changes to the Process Due to ease of applying online coupled with the high unemployment rates of the past few years have made this process overwhelming for many recruiters. So what has changes:  Simple job posting can generate hundreds of resumes in one day  Automation has rapidly advanced to assist in recruitment  Use of “automated systems”  Work off “Key Words”  Ranked by how well they meet the criteria  Get chance to have a phone interview  Allow applicants to check status of their application

Ways to measure the effectiveness of your selection tools 1) The method provides reliable information 2) The method provides valid information 3) The information can be generalized to apply to the candidates 4) The method offers high utility 5) The selection criteria are legal

Reliability  Reliability of a type of measurement indicates how free that measurement is from random error.  A reliable measurement therefore generates consistent results  Information involves statistics such as correlation coefficients which measure the degree to which two sets of answers  Reliability answers one important question – whether you are measuring something accurately

Validity  Describes the extent to which performance on the measure is related to what the measure is designed to assess, such as job performance  To determine whether a measure is valid is to compare many people’s scores on that measure with their job performance  Also can use correlation coefficients to determine validity

Final Selection  Top Down Selection (Rank) vs. Cutoff scores  Is the predictor linearly related to performance?  How reliable are the tests? 1. Top-down method – Rank order 2. Minimum cutoffs – Passing Scores

Ability to Generalize  Questions whether a selection method is valid in context in which the organization wants to use it.  Questions whether a selection method that was valid in one context is also valid in other contexts  Usually most valid for complex jobs

Practical Value  Means produces information that actually benefits the organization.  Cost vrs practical application Produces Utility  Utility = a method that provide economic value greater than the cost of using them.

Legal Considerations  As we learned earlier the U.S. government imposes legal limits on selection decisions.  Requires that the selection process be conducted in a way that avoids discrimination and provides access to employees with disabilities

Final Decision  Random Selection  Ranking  Grouping  Role of Discretion or “Gut Feeling”

Types of Contracts  Legal  Employment contract  Employment-at-will  Psychological  An implied contract  Employee promises: Hard work, extra effort, commitment to company goals.  Employee expects in return: Job security, fair treatment, development, pay and benefits.

 Employment-at-will  Employer not obligated to retain for specific time  Termination for any legitimate reason without liability  Disclaimers in applications and offer letter  Employment Contract  Employment for a definite period of time  Entitlements for compensation / benefits

Offer Letter  Legal document  Should be carefully worded  Creates obligations (intended or unintended)  Letter from HR or legal  Attraction tool  Final incentive for prospective hire  Should make new employee feel welcome  Letter from manager or company president

Job Offer Content Start date  Usually allows notice for previous employer Benefits  Usually a blanket statement and refer to HR documents Conditions of employment  Reference checks, drug screen, I-9, medical exam etc. Other conditions  Confidentiality / Non-compete / Arbitration Working hours Acceptance date

Job Offer Content Base compensation  Based on payroll schedule rather than annual salary  Payment schedule (especially if monthly)  FLSA designation Bonuses  As specific as possible including dates and criteria Stock options  Consult an expert  Grant price / criteria / vesting / contingencies

Job Offer Content  Integration clause  Letter contains all terms and conditions  Letter supercedes all other documents or conversations  Employment-at-will disclaimer  Employment is not for a specific duration  Employment terminable by either party at any time  Include the “magic words” but don’t go overboard

Responses Yes  Follow immediately with positive communication  Instructions for start day (when, where, etc) No  Try to find out why  Working conditions vs. $$$ Maybe / More time....  Find out when  Answer any questions

Those Not Selected Maintain positive relations with fair treatment  Inform promptly  Thank them for applying and acknowledge the effort  Tell them they were a finalist with good skills to offer Most companies do not provide details of decision Keep applications on file Notify by mail or by phone for higher jobs

Independent Contractors “You have been retained as an independent contractor for the XYZ project to be completed by ABC date.” “As a contractor you are not entitled to any benefits company will not withhold any taxes, FICA or other deductions.”

Managing Retention Cost of turnover and replacement Types of Turnover  Involuntary turnover  Voluntary turnover out of company control  Voluntary turnover that company can control Turnover and performance  Increases costs  Decreases productivity Positive vs. Negative Turnover

Analyzing Turnover Diagnosing retention problems  Active: Employee surveys  Active: Exit interviews  Passive: Research and HRIS data mining How much is too much turnover?  Depends on the organization  Depends on the position

Why Do People Leave? Desirability of Leaving  Job satisfaction  “Shocks”  Switching costs  Career progression General Ease of Leaving  Labor market conditions  Human capital (education and training)  Job offers