Applied Psychology in Human Resource Management seventh edition Cascio & Aguinis PowerPoint Slides developed by Ms. Elizabeth Freeman University of South Carolina Upstate Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Chapter 3 People, Decisions, and the Systems Approach Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Organizations & Decisions Who, where, when to hire How to train What are organization’s goals What are the costs of these goals Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Utility Theory aka Rational Decision Making A mathematical approach weighing cost benefits Forces a numeric evaluation of factors in decisions Provides a way to determine payoffs Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Utility Theory also defines consequences of decisions Tangibles – decreased turnover, increased profit Intangibles – satisfaction, atmosphere, image Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Example - How to train new hires. Strategy 1 – Train by learning speed Example - How to train new hires? Strategy 1 – Train by learning speed Training Costs $50,000, graduates 75% Strategy 2 – Train at same speed Training Costs $40,000, graduates 50% Total Payoff (appears to be) $10,000 But…risk losing fast learners due to boredom Also…risk losing slower learners due to pressure Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Utility Theory Benefits Decisions tend to be thoughtful Decisions tend to be pragmatic Decisions tend to follow a plan Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Organizations as Systems collection of inter-related parts unified by design common goals Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Classic System’s. Management View. Organization is a closed system Classic System’s Management View Organization is a closed system Focus is on internal operations Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Contemporary System’s Contemporary System’s Management View Organization is an OPEN SYSTEM Focus is on interactions with multiple changing environments Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Interacting factors Technology Competitors Suppliers Stockholders Consumers INPUTS  TRANSFORMATION OUTPUT Interacting factors Laws Employees Economy Unions Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Systems View of the Employment Process Employment as an Open Systems Process *different jobs require different recruiting efforts *phases of hiring process interdependent Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Job Analysis & Evaluation Results Detail specifications Job Analysis & Evaluation Results Detail specifications What work is done How to do the work Skills required for the work Training expectations Definitions of the values of the work Monetary Principles Behaviors Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

To complete job analyses, evaluations, organizations may develop own assessment tools use government publications as guide hire consultants Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

A Workforce Plan 1. Builds inventory current employees’ KSAOs 2 A Workforce Plan 1. Builds inventory current employees’ KSAOs 2. Forecasts future human resource needs both within the organization (internal) the general workforce (external) 3. Develops action plans to meet predicted needs 4. Includes procedures to determine how well the plan supports organizational needs (closes the feedback loop) Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Recruitment begins with a staffing requisition or a request to hire Recruitment begins with a staffing requisition or a request to hire approvals depend on organization size identifying timing & critical aspects includes a budget for cost of recruiting and the selection ratio Recruiters, advertising, supplies Availability applicants relative to the number of open positions Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Screening Strategy I: minimum standards Education Experience Skills Start dates Transportation Relocation Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Screening Strategy II: maximum standards Specializations, experience licensing critical skills avoiding the overqualified Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Risks to organization of bad hiring decisions. loss of reputation Risks to organization of bad hiring decisions loss of reputation loss of organizational commitment law suits decrease quality of output Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Erroneous Acceptances:. hiring the wrong person. Person has minimums Erroneous Acceptances: hiring the wrong person Person has minimums Person is not a good fit for the organization Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Erroneous Rejections: Erroneous Rejections: passing on a good hire Person may not function at lower levels Person would be awesome at higher levels Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Selection Matching person to job If applicant is selected, then the decision becomes which job within the organization Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Selection decisions are based on: Judgments – as in interviews Selection decisions are based on: Judgments – as in interviews Individual Group Conversations Communications – verbal & nonverbal Mechanical Information – as in written tests Verification of degrees Credit reports Background checks (judgments, convictions) Transcripts Letters of recommendation Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Factors Affecting Selection Factors Affecting Selection Decision Payoffs Expect increased payoffs with Low selection ratios Employee tenure Loose labor markets Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Factors Affecting Selection Factors Affecting Selection Decision Payoffs Expect decrease in payoffs with High selection ratios Variable costs (materials + wages) Taxes Tight labor market Length of time before employee fully functioning Performance unreliability Recruitment costs Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Factors Affecting Selection Factors Affecting Selection Decision Payoffs Expect increases or decreases in payoffs with changes in definition of criterion validity job performance Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Training & development Maximizes effectiveness of employees Training & development Maximizes effectiveness of employees Use of existing competencies Development of other critical competencies Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Maximizing payoffs to the organization Example, Maximizing payoffs to the organization Example, if you have two candidates – one with skills & one with ability to learn skills Generally best to select by caliber of person Person will learn quickly & be better long-term investment for organization Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Performance Management Systems. Always Include Performance Management Systems Always Include Management: Observation, evaluation, documentation, feedback & reward cycle maximizing organizational objectives And may include Appraisal: Recognition of personal performance with an end goal being an increased value to the organization & a corresponding share of the profits Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Organizational Exit. May be voluntary. Retirement. Voluntary buyout Organizational Exit May be voluntary Retirement Voluntary buyout Taking a new position May be involuntary Layoffs Termination for causes Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Depending on circumstances, organizational exit results to organization include Stress of worrying about losing job (Am I next? syndrome) Shock versus relief Increased effort Inconsistent performance Withdrawal High levels of cynicism Lack of trust Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall