Chapter 5 Personnel Decisions INP3004MAN3360 Dr. Steve

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Chapter 5
Personnel Decisions
INP3004/MAN3360Dr. Steve
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Laws Affecting Personnel Decisions

• Civil Rights Act of 1964 Law passed to give
  minorities the same access to college education,
  restaurants, public facilities, and employment
  selection
• Title VII Forbade discrimination on the basis
  of sex, race, religion, color, and national
  origin
• Covers state, local, and federal entities with 15
  or more employees
• Age Discrimination in Employment Act (1967)
  ADEA protects people over 40yrs of age
• Covers private and public entities with 20 or
  more employees
• Civil Rights Act (amended 1991) assures
  equality in training opportunities, promotion,
  retention, and performance appraisal (not just
  selection)
• Americans with Disabilities Act (1990) ADA
  protects people with disabilities from job
  discrimination
• private, state, and local entities in industries
  affecting commerce with 15 or more employees

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Adverse Impact

• Adverse Impact (est by CRA) selection methods
  should not cause a disproportionate percentage of
  people in a given category to be hired relative
  to another group
• 4/5ths Rule selection method should not be used
  if the selection ratio for any sub-group is less
  than 4/5ths of that for the largest group

If
Then Adverse Impact exists
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Adverse ImpactExample

• You have collected the following data for the
  selection procedure you are interested in. In
  1996, 200 non-minorities and 45 minorities
  applied for a job with your organization. Using
  your selection procedure, 40 non-minorities and 6
  minorities were selected. Based on this
  information, is there evidence of adverse impact?

• SR minorities
• 6 / 45 .13

• SR non-minorities
• 40 / 200 .20

• 4/5 .80
• Critical value (SR minorities must exceed) .80
  x .20 .16

• .13 is less than .16, therefore we have adverse
  impact

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Adverse Impact

• What happens if
• Adverse Impact is found?
• Employer must prove selection method is valid
• If 4/5ths rule is not violated?
• Employer does not need to validate selection
  method

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Equal Employment Opportunity Commission (EEOC)

• EEOC - created as part of Civil Rights Act to
  oversee employment practices and ensure that
  organizations abide by discrimination laws
• Uniform Guidelines published in 1978 to provide
  employers with rules to follow

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Important Supreme Court Cases

• Griggs v. Duke Power The Court ruled that if an
  individual sues a company for discrimination, the
  company must prove they are using a fair test
  (4/5th rule)
• Burden of proof on employer, NOT employee
• Albermarle Paper v. Moody The Court ruled that
  Uniform Guidelines were as good as law in regard
  to employment testing.
• Albermarle had validated a test for a few jobs
  (all white) then used the test on all applicants
  w/out doing a job analysis
• Bakke v. Univ of California The Court ruled
  that whites are protected against racial
  discrimination as well as minorities
• Bakke believed he was denied access to medical
  school and won
• Often mistakenly referred to as reverse
  discrimination

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What happens when someone sues?

• If Adverse Impact is suspected, an employee files
  formal complaint with government.
• Govt investigates and tries to work out
  agreement regarding use of test.
• If no agreement, company is sued for unfair
  selection practices.
• Company must prove test is NOT unfair and IS
  valid.
• If company loses must pay employee lost wages,
  AND everyone else who may have lost wages due to
  unfair practice.

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Americans with Disabilities Act

• ADA (1990) law to protect people with
  disabilities from job discrimination
• Disability A physical or mental impairment
  that substantially limits one or more of major
  life activities (such as breathing, seeing,
  walking, learning, etc.)
• Employer must provide Reasonable Accommodations
• Disabled include alcoholics, former drug users,
  mentally ill, as well as physical handicaps and
  illnesses
• Does not prevent employers from screening out
  disabled individuals who cant do the work
• Example Casey Martins right to use golf cart on
  PGA tour

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Predicting Job Performance

• Regression Y a bX
• Equation of line through the middle of points
• Y criterion score (performance)
• a Y-intercept
• b slope of line (weight given to test)
• X predictor score (test)

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RegressionExample
X 0, Y 1 X 2, Y 2 X 4, Y 3 X 6, Y
4

• Y 1 .5X

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Multiple Predictors
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Multiple Regression

• Y a b1X1 b2X2 bkXk

• Multiple predictors to improve prediction
• R predictive value, 0 to 1.0
• R2 variance in criterion accounted for by
  predictors
• if R .80, then R2 .64, meaning the predictor
  accounts for 64 of the variance in criterion
  scores
• if equation with 3 predictors has a predictive
  value of .80, and a 4th makes it .82, is it worth
  it?

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Concurrent vs. Predictive Validity

• Concurrent
• Predictor
• Criterion

Time

• Problems with Concurrent Validity
• No motivation to do well on test
• Employee has already learned on the job
• Restriction of range bad employees gone

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Validity Generalization

• Validity Generalization How well test
  generalizes to other areas.
• Most predictors have poor generalizability
  different criteria used for job success

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Recruitment

• Recruitment attempt to attract good people to
  apply for job
• Universities, job fairs, conferences, etc.

100 recruited 20 applicants 8 interviews 2
offers 1 hire
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RecruitmentRealistic Job Preview

• Realistic Job Preview informs applicant about
  good points and potential pitfalls of the job.
• Avoid overselling or misleading applicant
• Avoid early turnover for highly qualified workers
  
• Information may include economic status of org,
  any recent troubles with EEOC (not hiring
  minorities), the work environment
  (cubicles/office), etc.
• Effective in reducing turnover when presented as
  a video and shown before the job is offered

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RecruitingAffirmative Action

• Affirmative Action voluntary, proactive plan to
  recruit more minorities into the workforce to
  correct for past under-representation
• Minority schools
• Advertise in minority-read magazines, radio
  stations
• No law requiring AA, but govt incentives to do
  so
• NOT quotas
• Quotas are mandated by court for orgs that have
  been found guilty of discrimination
• AA is proactive and voluntary
• Argument sometimes made that minorities hired
  under AA plan may feel hired because of race and
  others may too.

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Bona Fide Occupational Qualification

• BFOQ Hiring practices that may seem
  discriminatory, but may be justified as a
  necessary requirement for the job
• Examples
• Left-handed dentist
• Height of AF pilots, submarine officers, etc
• Lingerie models
• Hooters food servers

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Selection

• When selecting applicants 3 variables affect
  quality of that decision
• Validity of the Predictor if validity is low,
  then selection is as good as random
• Selection Ratio (positions / applicants)
  lower the SR, the more selective you can be
  (higher criterion) and fewer false positives
  (more misses)
• Base Rate percentage of present employees who
  are successful. Can have greatest impact on orgs
  with base rate around 50

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SelectionValidity of Predictor
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SelectionSelection Ratio
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Selection Setting the Predictor Cutoff Scores

• Maximize Correct Hires and Correct Rejections
• Minimize Misses and False Positives
• Legally try to avoid misses possible unfair
  test
• False positives are expensive to org in terms of
  turnover and training
• Cutoff scores should
• Be reasonable, achievable
• Be consistent with job expectations, requirements
• Consider willingness to accept false positives or
  misses

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Determining CutoffBased on Criterion-Related
Validity
4.0
3.0
2.0
College GPA
1.0
0.0
1600
1400
1200
1000
800
600
400
SAT Scores
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SelectionBanding

• Banding controversial procedure used to avoid
  adverse impact.
• Select individuals on characteristics (race, sex)
  other than predictor score as long as they meet
  cutoff

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Selection ProceduresComparison

• Multiple Regression compensatory, assumes high
  score on one test can compensate for a low score
  on another
• Multiple Cutoff need a minimum score on all
  predictors
• No equation necessary
• How are cutoffs determined? Trial error,
  regression
• Example college entrance- must have 800 SAT
  2.0 HS GPA
• Multiple Hurdle must meet a minimum score on
  first test before applicant can proceed to second
  test (then third)
• Weed out poor applicants early on
• False positives that get thru on one test, may be
  detected on second test
• Example Drivers license must pass written
  test before taking road test

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Selection ProceduresComparison Example

• X1 X2 Predicted
• Applicant Score Score Criterion
• A 25 0 100
• B 0 50 100
• C 20 10 100
• D 15 20 100

Y 4X1 2X2

• Regression Using the equation, A, B, C, D are
  all equally acceptable
• Multiple Cutoff Using 10 as the multiple cutoff
  score, only C D are acceptable
• Multiple Hurdle Using 10 as X1 cutoff and 15 as
  X2 cutoff, A, C, D go to 2nd round, but only D
  is acceptable

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Test Utility

• Test Utility the monetary value a selection
  test has for the company in terms of improvement
  over the former method
• Must consider
• How much more efficient are workers (speed,
  accuracy)?
• How many employees are hired annually (turnover)?
• How long to employees stay on job (length of
  tenure)?
• How much is saved in training new employees?