1. Chapter 11: Decision Making Chapter 12: Final Match McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc., All Rights Reserved.

2. Chapter 11: Decision Making

3. Organization Strategy HR and Staffing Strategy Staffing Policies and Programs Staffing System and Retention Management Support Activities Legal compliance Planning Job analysis Core Staffing Activities Recruitment: External, internal Selection: Measurement, external, internal Employment: Decision making, final match Organization Mission Goals and Objectives 11-3

4. 11-4  Choice of Assessment Method  Validity Coefficient  Face Validity  Correlation with Other Predictors  Adverse Impact  Utility  Determining Assessment Scores  Single Predictor  Multiple Predictors  Hiring Standards and Cut Scores  Description of Process  Consequences of Cut Scores  Methods to Determine Cut Scores  Professional Guidelines  Methods of Final Choice  Random Selection  Ranking  Grouping  Ongoing Hiring  Decision Makers  HR Professionals  Managers  Employees  Legal Issues  Uniform Guidelines on Employee Selection Procedures  Diversity and Hiring Decisions

5. 11-5  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

6. 11-6  Validity Coefficient  Face Validity  Correlation With Other Predictors  Adverse Impact  Utility

7. 11-7  Practical significance  Extent to which predictor adds value to prediction of job success  Assessed by examining Sign Magnitude Validities above.15 are of moderate usefulness Validities above.30 are of high usefulness  Statistical significance  Assessed by probability or p values  Reasonable level of significance is p <.05  Face validity

8. 11-8  To add value, a predictor must add to prediction of success above and beyond forecasting powers of current predictors  A predictor is more useful the  Smaller its correlation with other predictors and  Higher its correlation with the criterion  Predictors are likely to be highly correlated with one another when their content domain is similar

9. 11-9  Role of predictor  Discriminates between people in terms of the likelihood of their job success  When it discriminates by screening out a disproportionate number of minorities and women, Adverse impact exists which may result in legal problems  Issues  What if one predictor has high validity and high adverse impact?  And another predictor has low validity and low adverse impact?

10. 11-10  Taylor-Russell Tables  Focuses on proportion of new hires who turn out to be successful  Requires information on: Selection ratio: Number hired / number of applicants Base rate: proportion of employees who are successful Validity coefficient of current and “new” predictors

12. 11-12  Economic Gain Formula  Focuses on the monetary impact of using a predictor  Requires a wide range of information on current employees, validity, number of applicants, cost of testing, etc.

13. 11-13  While most companies use multiple selection measures, utility models assume decision is  Whether to use a single selection measure rather than  Select applicants by chance alone  Important variables are missing from model  EEO / AA concerns  Applicant reactions  Utility formula based on simplistic assumptions  Validity does not vary over time  Non-performance criteria are irrelevant  Applicants are selected in a top-down manner and all job offers are accepted

14. 11-14  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?

15. 11-15  Single predictor  Multiple predictors  Three models shown  Multiple hurdles model

18. 11-18  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?

19. 11-19

20. 11-20  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

21. 11-21

22. 11-22  Methods to determine cut scores  Minimum competency  Top-down  Banding  Professional guidelines

23. 11-23

24. 11-24  What are the positive consequences associated with a high predictor cut score? What are the negative consequences?  Under what circumstances should a compensatory model be used? When should a multiple hurdles model be used?

25.  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 11-25

26. 11-26

27. 11-27  Role of human resource professionals  Determine process used to design and manage selection system  Contribute to outcomes based on initial assessment methods  Provide input regarding who receives job offers  Role of managers  Determine who is selected for employment  Provide input regarding process issues  Role of employees  Provide input regarding selection procedures and who gets hired, especially in team approaches

28. 11-28  What are the advantages of ranking as a method of final choice over random selection?  What roles should HR professionals play in staffing decisions? Why?

29. 11-29  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

30. 11-30  What guidelines do the UGESP offer to organizations when it comes to setting cut scores?

31. 11-31  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?

32. Chapter 12: Final Match McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc., All Rights Reserved.

33. Organization Strategy HR and Staffing Strategy Staffing Policies and Programs Staffing System and Retention Management Support Activities Legal compliance Planning Job analysis Core Staffing Activities Recruitment: External, internal Selection: Measurement, external, internal Employment: Decision making, final match Organization Mission Goals and Objectives 12- 33

34. 12-34  Employment Contracts  Requirements for Enforceable Contract  Parties to Contract  Form of Contract  Disclaimers  Contingencies  Other Employment Contract Sources  Unfulfilled Promises  Job Offers  Strategic Approach to Job Offers  Job Offer Content  Job Offer Process  Formulation of Job Offer  Presentation of Job Offer  Timing of the Offer  Job Offer Acceptance and Rejection  Reneging  New Employee Orientation & Socialization  Orientation  Socialization  Examples of Programs  Legal Issues  Employment Eligibility Verification  Negligent Hiring  Employment-at-Will

35. 12-35  Learn about the requirements for an enforceable contract  Recognize issues that might arise in the employment contract process  Understand how to make strategic job offers  Plan for the steps of formulating and presenting a job offer  Know how to establish a formal employment relationship  Develop effective plans for new employee orientation and socialization  Recognize potential legal issues involving final matches

36. 12-36  Requirements for enforceable contract  Parties to contract  Form of contract  Disclaimers  Contingencies  Other employment contract sources  Unfulfilled promises

37. 12-37  Requirements for enforceable contract  Offer  Acceptance  Consideration  Parties to contract  Employee or independent contractor  Third parties

38. 12-38  Form of contract  Written contract Does the company mean to be held to this? Where appropriate, avoid using words that imply binding commitment. Make sure all related documents are consistent with one another. Always have a second person review what another has written. Look at the entire hiring procedure.  Oral contract One-year rule Parole evidence Suggestions

39. 12-39  Disclaimers  Oral or written statement explicitly limiting an employee right and reserving that right for employer  Recommendations for enforcement Clearly stated and conspicuously placed in appropriate documents. Employee should acknowledge receipt and review of the document and the disclaimer. Should state that it may be modified only in writing and by whom. The terms and conditions of employment, including the disclaimer, as well as limits on their enforceability, should be reviewed with offer receivers and employees.

40. 12-40  Contingencies  Extending a job offer contingent on certain conditions being fulfilled by offer receiver  Other employment contract sources  Employee handbooks  Oral statements made by employer representatives

41. 12-41  Unfulfilled promises  Organizational HR issues Do not make promises unwilling to keep Be sure promises made are kept  Potential legal claims Breach of contract Promissory estoppel Fraud

42. 12-42  If you were the HR staffing manager for an organization, what guidelines might you recommend regarding oral and written communication with job applicants by members of the organization?

44. 12-44  Strategic Approach to Job Offers  Job offer content

45. 12-45

46. 12-46  Starting date  Duration of contract  Compensation  Starting pay Flat vs. differential rates Exh. 12.2: Example of Starting Pay Policies  Variable pay Short term Long term  Benefits - Ex. 12.3  Hours  Special hiring inducements  Hiring bonuses  Relocation assistance  Hot skill premiums  Severance packages  Restrictions on employees  Other terms and conditions  Acceptance terms  Sample job offer letter- Ex. 12.4

47. 12-47  Formulation of job offer  Presentation of job offer  Job offer acceptance and rejection  Reneging

48. 12-48  Knowledge of competitors  Labor demand issues Who are the competitors? What terms and conditions are they offering for the job for which the hiring organization is staffing?  Labor supply issues Offers need to attract number of staff required Offers need to consider KSAOs of each offer receiver and the worth of the KSAOs

49. 12-49  Applicant truthfulness  Minimal evidence exists on degree of applicant truthfulness  To combat deceit, organizations are pursuing verification of all applicant information  Likely reactions of offer receivers  Approaches to assess reactions to offers Gather information about various preferences from offer receiver during recruitment/selection process Conduct research on why offer receivers accept or decline job offers

50. 12-50  Policies on negotiations and initial offers  Job offers occur for both external / internal staffing  Consider costs of job offer being rejected by candidate  Candidates may be receiving counteroffers from current employer  Currently employed candidates incur costs for leaving and expect a “make whole” offer  Candidates are sophisticated in presenting their demands

51. 12-51  Strategies for presenting initial offer  Lowball offering the lower bounds of terms and conditions to the receiver  Competitive an offer that is “on the market,” neither too high nor too low  Best shot gives a high offer, one right at the upper bounds of feasible terms and conditions

52. 12-52  Two approaches  Mechanical approach  Sales approach

53. 12-53  Acceptance  Rejection  By organization  By offer receiver  Reneging

54. 12-54  If the same job offer content is to be given to all offer receivers for a job, is there any need to use the strategic approach to job offers? Explain.  What are the advantages and disadvantages to the sales approach in the presentation of the job offer?

55. 12-55  Orientation  Exh. 12.8: New Employee Orientation Program Suggestions  Socialization  Content People Performance proficiency Organization goals and values Politics Language History  Delivery

56. 12-56  What are examples of orientation experiences you have had as a new hire that have been particularly effective (or ineffective) in helping to make the person/job match happen?

57. 12-57  Employment Eligibility Verification  Under IRCA, company is prohibited from hiring or continuing to employ an alien not authorized to work in U.S.  Negligent hiring  Workplace torts issue involving claims by an injured plaintiff that plaintiff was harmed by an unfit employee who was negligently hired by company  Employment-at-will  Involves right of either employer or employee to unilaterally terminate employment relationship

58. 12-58  What are the steps an employer should take to develop and implement its policy regarding employment-at-will?

59. 12-59  Issue 1  A large financial services organization is thinking of adopting a new staffing strategy for entry into its management training program. The program will provide the trainees all the knowledge and skills they need for their initial job assignment after training. So the organization has decided to do college recruiting at the end of the recruiting season, hiring those who have not been fortunate enough to receive any job offers, paying them a salary of 10% below market, and providing no other inducements such as a hiring bonus or relocation assistance. The organization figures this strategy and employee value proposition will yield a higher percentage of offers accepted, low cost per hire, and considerable labor cost savings due to below market salaries. Evaluate this strategy from an ethical perspective.

60. 12-60  Issue 2  An organization has a staffing strategy in which it over-hires by 10% the number of employees it will actually need in any job category in order to ensure it meets its hiring needs. It reasons that some of the new hires will renege on the accepted offer, and that the organization can renege on some of its offers if need be to end up with the right number of new hires. Evaluate this strategy from an ethical perspective.