I/O PSYCHOLOGY  Human factors/ Ergonomics

o It is the study that concentrates on

WHAT IS INDUSTRIAL/ ORGANIZATIONAL
workplace design, human-machine
PSYCHOLOGY?
interaction, ergonomics, and physical
• Psychology is the study of behavior and mental fatigue and stress.
processes.

• Industrial/organizational (I/O) psychology is

the specialty area within psychology that is
concerned with: THE ROOTS AND EARLY HISTORY OF
INDUSTRIAL/ORGANIZATIONAL PSYCHOLOGY
– The study of behavior in work settings.

– The application of psychology principles

to change work behavior.

THE SCIENCE AND PRACTICE OF

INDUSTRIAL/ORGANIZATIONAL PSYCHOLOGY

I/O psychology has two objectives:

1. To conduct research in an effort

to increase our knowledge and understanding
of human work behavior.
2. To apply that knowledge to improve work
behavior, the work environment, and the
psychological conditions of the worker.

INDUSTRIAL PSYCHOLOGY MAJOR FIELDS

 Organizational Psychology
o It the study concerned with the issues
of leadership, job satisfaction,
employee motivation, organizational
communication, conflict management,
organizational change, and group • Around the turn of the 20th century, Frederick
processes within an organization. Taylor, an engineer, believed that scientific
 Personnel Psychology principles could be applied to the study of work
o It is the study and practice in such areas behavior.
as analyzing jobs, recruiting applicants,
• Scientific management, a movement started by
selecting employees, determining salary
Taylor, was a method of using scientific
levels, training employees, and
principles to improve the efficiency and
evaluating employee performance.
productivity of jobs.
o Job analysis
o Job Description • Taylor developed time-and-motion studies 
o Job Evaluation procedures in which work tasks are broken
o Employee Selection down into simple component movements timed
o Evaluating Selection Techniques and to develop a more efficient method for
Decisions performing the tasks.
o Legal Issues in Employee Selection
o Evaluating Employee Performance • During World War I, Robert Yerkes worked with
o Designing and Evaluating Training the U.S. Army to develop intelligence tests for
Systems army recruits.
 • The Army Alpha and Beta tests represented the
first mass testing efforts.
The Great Depression Years
• Because of the economic depression during the
1930s, fewer opportunities existed for industrial
psychologists.
• However, a group of Harvard psychologists
conducted studies at the Western Electric
Company in Hawthorne, Illinois.
• Elton Mayo and his colleagues examined the
effects of the physical environment on worker
productivity.
• In one particular study, they examined the
effect of lighting on worker productivity.
• Results of the study found that productivity
increased regardless of level of lighting.
• The Hawthorne effect refers to changes in
behavior occurring as a function of participants’
knowledge that they are being observed and
their expectations concerning their role as
research participants.
• The human relations movement was a
movement based on the studies of Elton Mayo
that emphasizes the importance of social
factors in influencing work performance.
• “Worker morale”
World War II
• World War II contributed greatly to the growth
of I/O psychology.
• State-of-the-art machinery lead to a need for
human factors psychologists.
• The Army General Classification Test was
developed.
INDUSTRIAL/ORGANIZATIONAL PSYCHOLOGY TODAY
AND IN THE FUTURE
Four Trends
 First trend: The changing nature
of work
o Organizational downsizing refers to the
strategy of reducing an organization’s
workforce to improve organizational
efficiency and/or competitiveness.
 Second trend: Expanding focus on human
resources
o Competition for highly-skilled workers
o Growing number of low-skilled workers
in the service industry
 Third trend: Increasing diversity
in the workforce
o Workforce is becoming more diverse
o Women make up two thirds of all
entering workers in the labor market.
o Ethnic minority group members make
up one third of all entering workers.
 Fourth trend: Increasing globalization of
business
o More businesses are focusing on the
global economy.
o Potential issues for worker training
ORGANIZATIONAL PSYCHOLOGY
Organizational Behavior
• This is the study of what people think, feel, and do in
and around organizations. It focuses on employees’
behavior, decisions, perceptions, and emotional
responses.
• Emerged as a distinct field around the 1940s
o Essence and virtue of leadership
o Organizational structure based on division of
labor
Perspectives of Organizational Effectiveness
• It is measured on the extent to which an organization
achieved its stated goals.
• Its ability to adapt on environmental and external
factors arises over time
• Execute social awareness and responsibility
PERSPECTIVES OF ORGANIZATIONAL EFFECTIVENESS
1. Open-Systems Perspective
2. Internal- Subsystems Effectiveness
 Organizational Efficiency - The amount of
outputs relative to inputs in the organization’s
transformation process
 Lean Management – A cluster of practices to
improve organizational efficiency by
continuously reducing waste, unevenness, and
over-burden in the production process.
3. Organizational Learning Perspective
 A perspective which holds that organizational
effectiveness depends on the organization’s
capacity to acquire, share, use, and store
valuable knowledge.
4. Intellectual Capital: The Stock of Organizational
Knowledge
a) Intellectual Capital - A company’s stock of
knowledge including human capital, structural
capital, and relationship capital.
b) Human Capital - The stock of knowledge, skills,
and abilities among employees that provides
economic value to the organization.
c) Organizational Capacity - The storage and
preservation of intellectual capital.
5. High-Performance Work Practices Perspective
• A perspective which holds that effective
organizations incorporate several workplace
practices that leverage the potential of human
capital.
6. Stakeholder Perspective
• Individuals, organizations and other entities
that affect, or are affected by, the
organization’s objectives and actions.
7. Values, Ethics, and Corporate Social Responsibility
• Relatively stable, evaluative beliefs that guide a
person’s preferences for outcomes or courses
of action in a variety of situations.
• Corporate Social Responsibility (CSR) -
Organizational activities intended to benefit
society and the environment beyond the firm’s
immediate financial interests or legal
obligations.
TYPES OF INDIVIDUAL BEHAVIOR
1. Task Performance
- refers to goal-directed behaviors under the individual’s
control that support organizational objectives.
2. Organizational Citizenship
– various forms of cooperation and helpfulness to
others that support the organization’s social and
psychological context.
3. Counterproductive Work Behaviors
- Voluntary behaviors that have the potential to directly
or indirectly harm the organization.
4. Joining and Staying with the Organization
– Attracting and retaining talented people is
particularly important as worries about skill shortages
heat up.
5. Maintaining Work Attendance JOB ANALYSIS

– It is to keep up a member’s motivation, satisfaction, What does it mean to analyze a job?

and active participation in the organization.

CONTEMPORARY ORGANIZATIONAL BEHAVIOR

• Characteristics of the Field

• Interdisciplinary in focus

• Descriptive in nature

• Basic Concepts of the Field

Almost all HRM activities are tied to job analysis; it is
1. Individual processes the starting point for sound HRM.
2. Interpersonal processes

3. Organizational processes/ characteristics

GLOBALIZATION AND DIVERSITY IN BUSINESS

1. Globalization - It is the economic, social, and cultural

connectivity with people in other parts of the world.

2. Diversity

• Surface-level Diversity - The observable demographic

or physiological differences in people, such as their
race, ethnicity, gender, age, and physical disabilities.
• Deep-level Diversity - Differences in the psychological
characteristics of employees, including personalities,
beliefs, values, and attitudes.
THE NATURE OF JOB ANALYSIS
Job analysis
– The procedure for determining the duties and
skill requirements of a job and the kind of
person who should be hired for it.

– It is the process of gathering and analyzing

information about the content and the human
requirements of jobs, as well as, the context in
which jobs are performed.

– It provides the foundation for such areas as

performance appraisal, employee selection,
training, and job design.

– It is a process of gathering, analyzing and

structuring about a job’s components,
characteristics and requirements ( Sanchez &
Levine, 2000)

– A process of determining the work

activities and requirements.
Job Analysis: Essential Questions

 Who will conduct?

 Internal Department
 Internal Task Force
 Supervisors
 Employees
 Consultants
 Interns
WHAT ARE THE STEPS IN JOB ANALYSIS?
 How often?

 Who should participate?

 Choices

 All employees
 Random sample
 Representative sample
 Convenience sample
Job Family - a group of jobs in an organization that are
 Considerations: Diversities
similar in some way
 Job competence
 Race Job Analysis : The Basic process
 Gender 1. Identify task performed
 Education
 Perspectives • Gathering existing information
• Interviewing subject matter experts (SMEs)
o Individual/group interviews/SME
 What types of information?
Conferences
 Level of specificity o Ammerman Technique
 Formal /informal o Follow interview guidelines
• Observation
• Job participation
• Job description
2. Write tasks statements
– A list of a job’s duties, responsibilities, reporting
relationships, working conditions, and • These task statements will be the job
supervisory responsibilities—one product of a job description.
analysis.
• Must contain an action ( what is done) and an
object ( to which the action is done), where,
how , why and when.
Job specifications
Characteristics of well-written task statements
– A list of a job’s “human requirements,” that is,
the requisite education, skills, personality, and so • One action and one object
on—another product of a job analysis. • Appropriate reading level
• The statement should make sense by itself
• All statements should be written in the same
tense
• Should include the tools and equipment used
to complete the task
 • Task statements should not be competencies
• Task statements should not be policies
• Include level of authority if decision making
included
Poorly written task Properly written task statement
statement

Sends purchase requests Sends purchase requests to the purchasing

department using campus mail

Drives Drives a five-speed truck to make food

deliveries within the city of Johor Bahru
5. Select tests to tap KSAOs
Locks hall doors Uses master key to lock hall doors at
midnight so that nonresidents cannot • The next step is to determine the best
enter the residence hall
method to tap the KSAOs needed during
recruitment
3. Rate task statements

• Tasks can be rated on various scales WHAT ARE THE METHODS USED IN JOB ANALYSIS?
o Importance The Interview
o Part-of-the-job
o Frequency of performance • Information sources
o Time spent
o Relative time spent – Individual employees
o Complexity – Groups of employees
o Criticality – Supervisors with knowledge of the job
• Research shows only two scales are necessary • Advantages

o Frequency – Quick, direct way to find overlooked

o Importance information.

• Disadvantages

– Distorted information
4. Determine essential KSAOs
• Interview formats

Knowledge A body of information needed to – Structured (Checklist)

perform a task – Unstructured
Interview Guidelines
Skill The competence to perform a certain • The job analyst and supervisor should work
task
together to identify the workers who know the
job best.
Ability A basic capacity for performing a wide
range of different tasks, acquiring a
• Quickly establish rapport with the interviewee.
knowledge, or developing a skill

• Follow a structured guide or checklist, one that

Other Personal factors such as personality,
lists open-ended questions and provides space
willingness, interest, and motivation
Characte-ristics and such tangible factors as licenses, for answers.
degrees, and years of experience
• Ask the worker to list his or her duties in order
of importance and frequency of occurrence.

• After completing the interview, review and

verify the data.
 • Disadvantages
Questionnaires
– Distortion of information
• Information source – Depends upon employees to accurately
– Have employees fill out questionnaires recall their activities
to describe their job-related duties and
responsibilities. Quantitative Job Analysis Techniques
• Questionnaire formats • The position analysis questionnaire (PAQ)
– Structured checklists – A questionnaire used to collect
– Opened-ended questions quantifiable data concerning the duties
• Advantages and responsibilities of various jobs.
– Quick and efficient way to gather – developed at Purdue University by
information from large numbers of McCormick, Jeanneret, and Mecham
employees (1972). It contains items organized into
• Disadvantages six main dimensions: a.) information
input, b.) mental processes, c.) work
– Expense and time consumed in output, relationships with other
preparing and testing the questionnaire persons, d.) job context, and e. 0other
Observation job-related variables such as work
schedule, pay, and responsibility.
• Information source

– Observing and noting the physical

activities of employees as they go about • Job Structure Profile.
their jobs. – A revised version of the PAQ was
developed by Patrick and Moore (1985).
 Advantages
The major changes in the revision
– Provides first-hand information include the item content and style, new
– Reduces distortion of information items to increase the discriminatory
power of the intellectual and decision-
 Disadvantages
making dimensions, and an emphasis
– Time consuming on having a job analyst.
– Difficulty in capturing entire job cycle
– Of little use if job involves a high level of • Functional job analysis (FJA)
mental activity. – Takes into account the extent to which
instructions, reasoning, judgment, and
Participant Diary/Logs mathematical and verbal ability are
necessary for performing job tasks.
• Information source

– Workers keep a chronological diary/ log

of what they do and the time spent in
each activity.

• Advantages

– Produces a more complete picture of

the job
– Employee participation
WHAT ARE JOB DESCRIPTION AND JOB
SPECIFICATION?
Writing Job Descriptions
• A job description
– A written statement of what the worker
actually does, how he or she does it,
and what the job’s working conditions
are.
– The written product of the job analysis
is the job description, which is a brief 2-
5 page summary of the tasks and job
requirements found in the job analysis.
– Thus, job analysis is the process of
determining the work activities and
requirements and job description is
the written result of the job analysis.
– Job analysis and job description is the
basis for many HR activities, such as
employee selection, evaluation ,
training, performance appraisal, job
design etc (Brannick & Levine, 2002)
• Sections of a typical job description
– Job identification
– Job summary
– Relationships
– Responsibilities and duties
– Standards of performance
– Working conditions
– Job specifications
• Job identification
– Job title: name of job
– Preparation date: when the description
was written
– Prepared by: who wrote the description
– Describes the nature of the job. It also
provides workers with some form of
identity.
– Assists in employee selection and
recruitment
– The job title influences the perceptions
of job worth and status.
– Affects the accuracy of resumes.
• Job summary
– Describes the general nature of the job
– Lists the major functions or activities
– The language used should be easily
understandable.
– Avoid the use of jargon and
abbreviations
• Relationships (chain of command)
– Reports to: employee’s immediate
supervisor
– Supervises: employees that the job
incumbent directly supervises
– Works with: others with whom the job
holder will be expected to work and
come into contact with internally.
– Outside the company: others with
whom the job holder is expected to
work and come into contact with
externally.
• Responsibilities and duties
– A listing of the job’s major
responsibilities and duties (essential
functions)
– Defines limits of jobholder’s decision-
making authority, direct supervision,
and budgetary limitations.
• Work Activities – These are the tasks and
activities in which the worker is involved. These
tasks and activities should be organized into
meaningful categories.
 Tools and Equipment – This is to identify what
are the facilities that potential employees will
use in relation to their tasks and activities.
 Job context- This section should describe the
environment in which the employee works and
should mention stress level, work schedule,
physical demands, level of responsibility,
temperature, number of coworkers, degree of
danger, and any other relevant information,
degree of supervision, ergonomic details.
 Work Performance - This section contains a
relatively brief description of how an
 employee’s performance is evaluated and what • Are employees in the position actually required
work standards are expected of the employee. to perform the function?

• Is there a limited number of other employees

 Compensation Information - This section of the
job description should contain information on
the salary grade and the factors used to
determine the salary. The actual salary or salary
range should not be written in the job
description
available to perform the function?
• What is the degree of expertise or skill required
to perform the function?
• What is the actual work experience of present
or past employees in the job?

• What is the amount of time an individual

 Job Competencies - These are the knowledge,
skills, abilities, and other characteristics
(KSAOs) (such as interest, personality, and
training) that are necessary to be successful on
the job.
actually spends performing the function?
• What are the consequences of not requiring the
performance of the function?

• Standards of performance and working

conditions
Is the Job Function Essential? – Lists the standards the employee is
• What three or four main activities actually expected to achieve under each of the
constitute the job? Is each really necessary? job description’s main duties and
responsibilities.
• What is the relationship between each task? Is
there a special sequence which the tasks must
follow?

• Do the tasks necessitate sitting, standing,

crawling, walking, climbing, running, stooping,
kneeling, lifting, carrying, digging, writing,
operating, pushing, pulling, fingering, talking,
listening, interpreting, analyzing, seeing,
coordinating, etc.?

• How many employees are available to perform

the job function? Can the job function be
distributed among other employees?

• How much time is spent on the job performing

each particular function? Are infrequent tasks
less important to success?

• Would removing a function fundamentally alter

the job?

• What happens if a task is not completed on

time?

• Does the position exist to perform that

function?
WRITING JOB SPECIFICATIONS • Person/job Fit

• Specifications for trained personnel – Matching characteristics of people with

characteristics of jobs.
– Focus on traits like length of previous
service, quality of relevant training, and
previous job performance.

• Specifications for untrained personnel

– Focus on physical traits, personality,

interests, or sensory skills that imply
some potential for performing or for
being trained to do the job.
Classic Approaches to Job Design
• Specifications Based on Judgment

– Self-created judgments (common sense)

– List of competencies in Web-based job
descriptions (e.g.,
www.jobdescription.com)
– O*NET online (www.onetonline.org)
– Standard Occupational Classification

• Specifications Based on Statistical Analysis

– Attempts to determine statistically the

relationship between a predictor or
human trait and an indicator or
criterion of job effectiveness.
Writing Job Descriptions
 Step 1. Decide on a Plan
 Step 2. Develop an Organization Chart
 Step 3. Use a Job Analysis/Description
Questionnaire
 Step 4. Obtain Lists of Job Duties from O*NET
(www.onetonline.org)
 Step 5. Compile the Job’s Human Requirements
from O*NET
 Step 6. Complete Your Job Description
WHAT IS JOB DESIGN?
Job Design/Re-Design
• Job Design
– Organizing tasks, duties, and
responsibilities into a productive unit of
work.
• Job rotation
– Moving a trainee from department to
department to broaden his or her
experience and identify strong and
weak points to prepare the person for
an enhanced role with the company
– Systematically moving workers from
one job to another to enhance work
team performance.
• Job enlargement
– Assigning workers additional same level
activities, thus increasing the number of
activities they perform.
• Job enrichment
– Redesigning jobs in a way that increases
the opportunities for the worker to
experience feelings of responsibility,
achievement, growth, and recognition.
RECRUIMENT AND SELECTION

Human Resource Department (HR)

- can save organizations a lot of money if proper

employee selection is observed.

FUNCTIONS:

1. Explore ways in recruiting employees

2. Explain job hunting methods
3. Discuss interviewing techniques
4. Offer tips in finding, obtaining, and landing a
job.

RECRUITMENT

• It plays an important part in selecting potential

employees, attracting the right qualifications to apply
for job vacancies.

• It is also utilized to help in decisions whether to

promote someone from within the organization
(internal recruitment).

Internet Recruiting

SOURCES OF RECRUITMENT

What are internal and external recruiting?

 Call Ads

What are the characteristics of effective recruitment • Often used to quickly screen applicants
methods? • Practice your first few sentences
• Be prepared for a short phone interview
Effective Recruitment Methods Should • Have your resume ready to answer questions
• Have paper and pencil close by
• Get the attention of the public
• Screen unqualified applicants Sales
• Motivate qualified people to apply Experienced sales people preferred. Neat and dependable.
Flexible hours & good pay. Call 366-6071, 12 – 8:00 p.m., Tues-
• Be cost effective
Fri; Sat. 10 a.m.-5 p.m.
• Be timely

Media Ads
Send Resume
Only 10% of all jobs are advertised
• Employer expects a large response
• Newspaper • Type envelope if possible
• Television • Include cover letter
• Radio • Do not use your employer’s stationary
• Web sites • Send
• Billboards – Immediately?
– Wait a few days?
RECEPTIONIST
NEWSPAPER EMPLOYMENT ADS Local construction company has immediate opening for person
with excellent telephone skills and professional manner to operate
Running ads in periodicals such as local newspapers or the switchboard and greet the public. Typing skills required. Send
resume to: Personnel, Acme Co., Box 20069, Roanoke, VA 24018
professional journals is a common method of recruiting
employees.
Effective Print Ads Blind Box
• Used when employer
• Creative
– doesn’t want incumbent to know
• Attractive
– doesn’t want name in the public
• Contain information about the job
– Is afraid people won’t apply if they
knew the name of the employer
Newspaper Employment Ads
– The company wants to terminate an
Four Major Types
employee but wants to find a
replacement before doing so.
• Apply in person
• Call
• Send resume immediately
• Send resume
• Blind box
Carpet Cleaning
Looking for clean cut, reliable, self-motivated person to clean carpet for
Apply-in-Person Ads growing business. Room for advancement. Must be at least 21 years old and
– when the company is overwhelmed by the numerous have a valid drivers license. Send resume to Box P-271, c/o Roanoke Times
& World News, P.O. Box 491, Roanoke, VA 24010
phone calls this is usually done
DIRECT MAIL
• Dress as if it were an interview
• Be prepared to be interviewed on the spot -an organization sends out mass mailings for those
• Bring copies of your resume people who are not active job hunters.
• Bring a black pen
• Be nice to the receptionist -usually useful for positions involving specialized skills.
CUSTOMER SERVICE—Local home health company has an EMPLOYMENT AGENCIES
immediate, full time position available. Direct personal contact and
requires a caring individual. Some typing and billing helpful.
Competitive salary and benefits. Apply in person, 9 a.m. to 5 p.m., • These are a group of
Mon-Fri., 2501 Williamson Road people/organization/company that deploys
 qualified candidates depending on their client’s
needs.
• Types
– Public (Accredited agencies of POEA, Public
Employment Services Office, DOLE)
• operated by a state or local
government
• specializes in placing applicants in
blue-collar or clerical positions
• always free of charge and sometimes
supported by government programs to
help pay training costs
– Private Employment Agency
(Corporations accredited agencies of
DOLE)
• Employer pays fee
• Applicant pays fee
– Executive search firms
– Temporary employment agencies
Programmer/Analyst
$30 to $40’s + Fee Paid
Degree required. ASCS-BSCS. 1-2 years experience.
989-2831 Carol Day & Associates
SITUATION-WANTED ADS
• Ads run by applicants
• Internet has perhaps made these obsolete
• Effectiveness
• Are placed by the candidates rather than by
organizations. Some list extensive qualifications,
some give applicants’ names, and some are
generally more creative than others.
Top Speechwriter
Currently writing speeches for Fortune 200 CEO. Background
in tech, multi-industry, Wall St., Wash DC
Box EA-648,Wall Street Journal
HELP-WANTED ADS
• Signage or placards provided by the employer
that is posted mostly in the vicinity of the
workplace
POINT OF PURCHASE METHODS
• is based on advertising principles used to
market products to consumers.
• Signs
• Cash register receipts
• On-hold phone recording
• Restaurant placemats, Pizza boxes, Milk cartons
• Table tents
• Sides of trucks
• Brochures
• Book markers
ONLINE/ELECTRONIC ADVERTISEMENT
INTERNET – fast-growing source of recruitment
• Job vacancies posted or announce at
multimedia resources
EDUCATIONAL INSTITUTION
• Partnership with educational centers, Colleges,
and Universities to acquire the list of fresh
graduates of a certain course related to their job
vacancies
• Conducting job fairs and mock interviews to help
the students gain knowledge on recruitment
process
JOB FAIRS
• It is a recruitment method in which several
employees are available at one location so that
many applicants can obtain information at one
time.
• To provide information in a personal fashion to
as many applicants as possible.
3 WAYS OF CONDUCTING JOB FAIRS
1. Different Organizations have booths at the
same location
• Colleges (at least twice a year)
- souvenirs are given by each organization like t-
shirts, yardsticks, & cups.
• Destructed Areas (due to disaster)
- for local employment
2. Different organizations in the same field in the same
location
• Example: Education Job Fair
Advantages and Disadvantages
• Each visitor is a potential applicant for every
organization
• Competition among organizations
3. An Organization organizes its own

EMPLOYEE REFERRALS
• It is a method in which current employees
recommend family members and friends for
specific job openings
 most effective method of recruitment
according to a survey of 450 HR professionals.
• As part of the method, most organization
incentivise the method as a form of retention to
their employees.
PROFESSIONAL ORGANIZATIONS
• These are a professional group of a certain job
family that may be good source of potential employees.
It has mostly the aligned candidates in a job vacancy.
Examples: Philippine Mental Health Association
(PMHA), Psychological Association of the Philippines
(PAP), People Management Association of the
Philippines (PMAP)
EXECUTIVE SEARCH FIRMS (head hunters)
• -firms that place applicants in high-paying jobs
(executives, engineers, programmers, etc)
• -always charge their fees to the organization
rather than the applicant
• Then would do some research about the
association like attending conferences, scanning
the website to identify “the cream of the crop”
and then approach those people about applying
for a job (Overman, 2007)
• Surf the web – a method to find passive
applicants
- in social networking sites (Facebook, Myspace)
EVALUATING THE EFFECTIVENESS OF RECRUITMENT
STRATEGIES
• Number of Applicants
• Cost per Applicant
• Number of Qualified Applicants
• Cost of Qualified Applicants
• Number of Successful employees generated by
each recruitment source
• Number of minorities and women applied for
the job and were hired
PREVIEW
Realistic Job Preview
- giving an applicant an honest assessment of a job
- its goal is to inform candidates on what to expect and
understand the nature of its job.
-Can be done before or during job offer presentation.

INCREASING APPLICANT DIVERSITY Expectation-Lowering Procedure

- A form of RJP that lowers an applicant’s expectation
• Organizations make special efforts to recruit
about the various aspects of the job.
underrepresented groups
-Women
-Minorities
• The key to recruiting minority applicant is how
they perceive the diversity of the organization
during a site visit.

NON-TRADITIONAL POPULATIONS

• If traditional recruitment methods are

unsuccessful, organizations tend to look for
potential applicants from non-traditional
populations (i.e. retired applicants, gay and
lesbian employees, welfare recipients,
intellectually disabled, physically disabled, etc.)

RECRIUTING “PASSIVE” APPLICANTS

• Recruiter must build relationship with

professional associations for each of the fields
in which they recruit.
WHAT IS THE SELECTION PROCESS?
• Matching People and Jobs
• Selection
– The process of choosing individuals who
have relevant qualifications to fill
existing or projected job openings.
• Selection Considerations
– Person-job fit: job analysis identifies
required individual competencies
(KSAOs) for job success.
– Person-organization fit: the degree to
which individuals are matched to the
culture and values of the organization.
Effective Employer Selection Techniques
• Valid Selection test- it is one that is based on a
job analysis, predicts work- related behavior,
and measure its constructs.
• Reduce the chance of legal challenges – if the
job contents appears to be related to the nature
of work and doesn’t invade a candidate’s
privacy.
• Cost-effective (cost to purchase or create, to
administer, and to score) – the terms of the cost
to purchase or create, to administer, and to
score selection process are feasible.
WHAT ARE THE DIFFERENT SELECTION METHODS?
TYPES OF TESTS
• Tests of cognitive abilities
– Intelligence Tests
• Tests of general intellectual abilities
that measure a range of abilities,
including memory, vocabulary,
verbal fluency, and numerical ability.
– Aptitude tests
• Tests that measure specific mental
abilities, such as inductive and
deductive reasoning, verbal
comprehension, memory, and
numerical ability.
• Tests of motor abilities
– Tests that measure motor abilities, such
as finger dexterity, manual dexterity,
and reaction time.
• Tests of physical abilities
– Tests that measure static strength,
dynamic strength, body coordination,
and stamina.
• Personality tests
– Tests that use projective techniques
and trait inventories to measure basic
aspects of an applicant’s personality,
such as introversion, stability, and
motivation.
– Disadvantage
• Personality tests—particularly
the projective type—are the
most difficult tests to evaluate
and use.
– Advantage
• Tests have been used
successfully to predict
dysfunctional job behaviors and
identify successful candidates
for overseas assignments.
 THE “BIG FIVE”
• Openness to experience
– The disposition to be imaginative,
nonconforming, unconventional, and
autonomous.
• Conscientiousness
– Is comprised of two related facets:
achievement and dependability.
• Extraversion
– The tendency to be sociable, assertive,
active, and to experience positive
effects, such as energy and zeal.
• Agreeableness
– The tendency to be trusting, compliant,
caring, and gentle.
• Neuroticism/Emotional stability
– The tendency to exhibit poor emotional
adjustment and experience negative
effects, such as anxiety, insecurity, and
hostility.
Other Tests
• Interest inventories
– Personal development and selection
devices that compare the person’s
current interests with those of others
now in various occupations so as to
determine the preferred occupation for
the individual.
• Achievement tests
– Test that measure what a person has
already learned—“job knowledge” in
areas like accounting, marketing, or
personnel.
• Web-Based (Online) testing
– Eliminates costly and inefficient paper-
and-pencil testing processes.
– Allows for role-playing by applicants.
– Use of computer-based scoring
eliminates rater bias.
– Provides immediate scoring and
feedback of results to applicants.
– Can be readily customized for specific
jobs.
WORKING SAMPLES AND SIMULATIONS
Work Samples
• Work samples
– Actual job tasks are used in testing
applicants’ performance.
• Work sampling technique
– A testing method based on measuring
an applicant’s performance on actual
basic job tasks.
• Work Simulations
– Management assessment center
• A simulation in which
management candidates are
asked to perform realistic tasks
in hypothetical situations and
are scored on their
performance.
– Typical simulated exercises include:
• The in-basket
• Leaderless group discussion
• Management (or Business)
games
• Individual presentations
• Objective tests
• The interview
– Video-Based situational testing
• A situational test comprised of
several video scenarios, each
followed by a multiple choice
question that requires the
candidate to choose from
among several courses of
action.
• While the evidence is mixed,
the results suggest that video-
based situational tests can be
useful for selecting employees.
– The miniature job training and
evaluation approach
• Candidates are trained to
perform a sample of the job’s
tasks, and then are evaluated
on their performance.
• The approach assumes that a
person who demonstrates that
he or she can learn and perform
the sample of tasks will be able
 to learn and perform the job
itself.
BACKGROUND INVESTIGATIONS AND REFERENCE
CHECKS
• Extent of investigations and checks
– Reference checks (87%)
– Background employment checks (69%)
– Criminal records (61%)
– Driving records (56%)
– Credit checks (35%)
• Reasons for investigations and checks
– To verify factual information provided
by applicants.
– To uncover damaging information.
• Sources of information for background checks:
– Former employers
– Current supervisors
– Commercial credit rating companies
– Written references
• Reference providers’ concerns
– Fear of legal reprisal for defamation
– Not wanting to damage the applicant’s
chances
– Helping to get rid of incompetent
employees
MAKING BACKGROUND CHECKS MORE USEFUL
• Include on the application form a statement for
applicants to sign explicitly authorizing a
background check.
• Use telephone references if possible.
• Be persistent in obtaining information.
• Ask open-ended questions to elicit more
information from references.
• Use references provided by the candidate as a
source for other references.
Checking Background Information
Step 1—Disclosure and authorization.
Inform the employee/applicant that a
report will be requested and obtain written
authorization.
Step 2—Certification.
The employer must certify to the reporting
agency that the employer will comply with
the federal and state legal requirements.
Step 3—Providing copies of reports.
The employer must provide copies of the
report to the applicant or employee if
adverse action is contemplated.
Step 4—Notice after adverse action.
After the employer provides the employee
or applicant with copies of the investigative
reports and a “reasonable period” has
elapsed, the employer may take an adverse
action.
The Polygraph and Honesty Testing
• The polygraph (or lie detector)
– A device that measures physiological
changes,
– The assumption is that such changes
reflect changes in emotional state that
accompany lying.
Permitted Users of the Polygraph
• Employers with contracts involving:
– National defense or security
– Nuclear-power
– Access to highly classified information
– Counterintelligence
• Other exceptions
– Hiring of private security personnel
– Hiring persons with access to drugs
– Conducting ongoing investigations
involving economic loss or injury to an
employer’s business.
Paper-and-Pencil Honesty Tests
• Paper-and-pencil honesty tests
– Psychological tests designed to predict
job applicants’ proneness to dishonesty
and other forms of counterproductivity.
– Measure attitudes regarding things like
tolerance of others who steal,
acceptance of rationalizations for theft,
and admission of theft-related
activities.
Antitheft Screening Procedure
• Ask blunt questions.
• Listen, rather than talk.
• Do a credit check.
• Check all employment and personal references.
 • Use paper-and-pencil honesty tests and
psychological tests.
• Test for drugs.
• Establish a search-and-seizure policy and
conduct searches.
Graphology
• Graphology (handwriting analysis)
• Assumes that handwriting reflects basic
personality traits.
• Graphology’s validity is highly suspect.
Physical Examination
• Reasons for preemployment medical
examinations:
• To verify that the applicant meets the
physical requirements of the position
• To discover any medical limitations you
should take into account in placing the
applicant.
• To establish a record and baseline of
the applicant’s health for future
insurance or compensation claims.
• To reduce absenteeism and accidents
• To detect communicable diseases that
may be unknown to the applicant.
Substance Abuse Screening
• Types of screening:
•Before formal hiring
•After a work accident
•Presence of obvious behavioral
symptoms
• Random or periodic basis
• Transfer or promotion to new position
• Types of tests
• Urinalysis
• Hair follicle testing
• Substance Abuse in the Workplace
• Issues
• Impairment versus presence
• Recreational use versus
habituation
• Intrusiveness of procedures
• Accuracy of tests
Evaluation of Measurement Instruments
• Reliability has to do with the consistency of the
instrument.
- Internal Consistency (Consistency of the items)
- Test-retest Reliability (Consistency over time)
- Interrater Reliability (Consistency between
raters)
- Split-half Methods
- Alternate Forms Methods
• Validity of an instrument has to do with the
ability to measure what it is supposed to
measure and the extent to which it predicts
outcomes.
- Face Validity
- Construct & Content Validity
- Convergent & Divergent Validity
- Predictive Validity
- Discriminant Validity
INTERVIEWING CANDIDATES
Basic Features of Interviews
• An interview
– A procedure designed to obtain
information from a person through oral
responses to oral inquiries
• Types of interviews
– Selection interview
– Appraisal interview
– Exit interview
• Interviews formats
– Structured
– Unstructured
• Why the interview is so popular:
 – It is especially practical when there are
only a small number of applicants.
– It serves other purposes, such as public
relations
– Interviewers maintain great faith and
confidence in their judgments.
MEDIUM
Kinds of Medium
FORMATS OF INTERVIEWS
Ground Rules for Employment Interviews
• Establish an interview plan
• Establish and maintain rapport
• Be an active listener
• Pay attention to nonverbal cues
• Provide information freely
• Use questions effectively
• Separate facts from inferences
• Recognize biases and stereotypes
• Control the course of the interview
• Standardize the questions asked
TYPES OF INTERVIEWS
• Selection interview
– A selection procedure designed to
predict future job performance on the
basis of applicants’ oral responses to
oral inquiries.
• Appraisal interview
– A discussion, following a performance
appraisal, in which supervisor and
employee discuss the employee’s rating
and possible remedial actions.
• Exit interview
– An interview to elicit information about
the job or related matters to the
employer some insight into what’s right
or wrong about the firm.
STYLE
- It is determined by the number of candidates
and the interviewers
Styles of Interview:
- One-on-one interview
- Serial/Return interview
- Panel interview
- Group Interview
- These are the other tools and platforms used to
conduct interviews
- Telephone Interview
- Videoconference interviews
- Written Interviews (Direct or Electronic Mail)
• Unstructured or nondirective interview
– An unstructured conversational-style interview in
which the interviewer pursues points of
interest as they come up in response to
questions.
– Interviewers are free to ask anything they want. It
doesn’t require to have consistency in what
they ask of each candidate, and may assign
numbers of points at their own discretion.
– ADVANTAGES
• It concentrates on general intelligence,
education, and training
• Timesaver
– DISADVANTAGES
• Poor intuitive Ability – Interviewers depend on
their own intuition and judgment
• Lack of Job relatedness – Interview questions
are not connected or useful for the job
• Primary Effects/First Impressions – Information
provided prior or early in the in interview
carries more weight than the entire interview
process
• Contrast Effects - Candidates’
performance is judged relation to the
performance of previous interviewees
 • Bias Information – It seems to occur only
when interviewers aren’t aware of job
requirements

• Interviewee Appearance – It is when

physically attractive applicants have an
advantage in interviews over less
attractive applicants

• Non-verbal Cues – Gestures and non-

verbal behaviors affect the judgment of
the interviewer

• Structured or directive interview

– An interview following a set sequence of

questions.

– The questions are from the job analysis, all

applicants are asked the same question, and
there is a standardized scoring key to evaluate
each answer.

– ADVANTAGES
• The distinction of its job relatedness
and standardized scoring INTERVIEW CONTENT: TYPES OF QUESTIONS
• It is more reliable on a legal standpoint
• Lower adverse impact on the candidates • Situational interview

– A series of job-related questions that focus on

– DISADVANTAGES how the candidate would behave in a given
• Candidates perceive structured situation.
interviews to be more difficult
• Candidates may feel that they did not – Creating situational interview questions
have the chance to tell the interviewer • The critical incident
everything they wanted to • The question
• The benchmark answers
CREATING A STRUCTURED INTERVIEW
• It must be patterned from the job analysis • Behavioral interview
• The questions created shall be designed to measure – A series of job-related questions that focus on
the candidates’ skills and experiences if these are fitted how they reacted to actual situations in the
for the job vacancies.
past.
• Determining KSAOs to identify the needed
information on how to perform the tasks • Job-related interview

– A series of job-related questions that focus on

relevant past job-related behaviors.

• Stress interview

– An interview in which the interviewer seeks to

make the applicant uncomfortable with
occasionally rude questions that supposedly to
spot sensitive applicants and those with low or
high stress tolerance.
 • Puzzle questions
– Recruiters for technical, finance, and other
types of jobs use questions to pose problems
requiring unique (“out-of-the-box”) solutions
to see how candidates think under pressure.
PERSONAL OR INDIVIDUAL INTERVIEWS
• Unstructured sequential interview
– An interview in which each interviewer
forms an independent opinion after
asking different questions.
• Structured sequential interview
– An interview in which the applicant is
interviewed sequentially by several
persons; each rates the applicant on a
standard form.
• Panel (broad) interview
– An interview in which a group of
interviewers questions the applicant.
• Mass (group) interview
– A panel interviews several candidates
simultaneously
COMPUTERIZED INTERVIEWS
• Computerized selection interview
– An interview in which a job candidate’s
oral and/or computerized replies are
obtained in response to computerized
oral, visual, or written questions and/or
situations.
• Characteristics
– Reduces amount of time managers
devote to interviewing unacceptable
candidates.
– Applicants are more honest with
computers
– Avoids problems of interpersonal
interviews
– Mechanical nature of computer-aided
interview can leave an applicant
dissatisfied.
FACTORS AFFECTING INTERVIEWS
• First impressions
– The tendency for interviewers to jump
to conclusions—make snap
judgments—about candidates during
the first few minutes of the interview.
– Negative bias: unfavorable information
about an applicant influences
interviewers more than does positive
information.
• Misunderstanding the job
– Not knowing precisely what the job
entails and what sort of candidate is
best suited causes interviewers to make
decisions based on incorrect
stereotypes of what a good applicant is.
• Candidate-order error
– An error of judgment on the part of the
interviewer due to interviewing one or
more very good or very bad candidates
just before the interview in question.
• Nonverbal behavior and impression
management
– Interviewers’ inferences of the
interviewee’s personality from the way
he or she acts in the interview have a
large impact on the interviewer’s rating
of the interviewee.
– Clever interviewees attempt to manage
the impression they present to
persuade interviewers to view them
more favorably.
• Effect of personal characteristics:
attractiveness, gender, race
– Interviewers tend have a less favorable
view of candidates who are:
• Physically unattractive
• Female
• Of a different racial or regional
background
• Disabled
 • Interviewer behaviors affecting interview • Prepare for the interview
outcomes
– Secure a private room to minimize
– Inadvertently telegraphing expected interruptions.
answers.
– Talking so much that applicants have no – Review the candidate’s application and
time to answer questions. résumé.
– Letting the applicant dominate the
– Review the job specifications
interview.
– Acting more positively toward a favored • Establish rapport
(or similar to the interviewer) applicant.
– Put the person at ease.
Designing and Conducting the Interview
• Ask questions
• The structured situational interview
– Use either situational questions (preferred) – Follow your list of questions.
or behavioral questions that yield high
criteria-related validities. – Don’t ask questions that can be
Step 1: Job Analysis answered yes or no.
Step 2: Rate the Job’s Main Duties
SELECTION DECISION MODELS
Step 3: Create Interview Questions
Step 4: Create Benchmark Answers
Step 5: Appoint the Interview Panel and Conduct
Interviews

HOW TO CONDUCT AN EFFECTIVE INTERVIEW

• Structure your interview:
1. Base questions on actual job duties.
2. Use job knowledge, situational, or
behaviorally oriented questions and
objective criteria to evaluate the
interviewee’s responses.
3. Train interviewers.
4. Use the same questions with all
candidates.
5. Use descriptive rating scales (excellent,
fair, poor) to rate answers.
6. Use multiple interviewers or panel
interviews.
7. If possible, use a standardized interview
form.
8. Control the interview.
9. Take brief, unobtrusive notes during the
interview.
• Compensatory Model
– Permits a high score in one area to
make up for a low score in another
area.
• Multiple Cutoff Model
– Requires an applicant to achieve a
minimum level of proficiency on all
selection dimensions.
• Multiple Hurdle Model
– Only applicants with sufficiently high
scores at each selection stage go on to
subsequent stages in the selection
process.

CREATING A SCORING KEY FOR INTERVIEW ANSWERS

• Right/Wrong Approach - Some interview questions,

can be scored simply on the basis of whether the
answer given was correct or incorrect.

• Typical-Answer Approach – It indicates that increasing

the number of benchmark answers will greatly increase
the scoring reliability
• Key-Issues Approach - a list of key issues they think PERFORMANCE MANAGEMENT AND APPRAISAL
should be included in the perfect answer.
What is Employee Performance?

This is the job-related activities executed by an

FINAL DECISION employee.

• Final Decision It includes how well the employee performs on what is

expected from her/him. It also helps to provide
– Selection of applicant by departmental
performance appraisal for employees
or immediate supervisor to fill vacancy.
Performance appraisal
– Notification of selection and job offer
by the human resources department. Evaluating an employee’s current and/or past
performance relative to his or her performance
WRITING COVER LETTERS
standards.
- Salutation
Performance management
- Paragraphs
- Signature The process employers use to make sure employees are
working toward organizational goals.
Writing a resume
WHAT ARE THE USES OF PERFORMANCE APPRAISAL?
- The resume must be attractive and easy to
read.
- The resume cannot contain typing, spelling,
grammatical or factual mistakes.
- The resume should make the applicant look
as qualified as possible

Types of resume

- Chronological resume
- Functional resume
- Psychological resume

WHY PERFORMANCE MANAGEMENT?

 Increasing use by employers of performance

management reflects:
o The belief that traditional performance
appraisals are often not just useless but
counterproductive.

o The necessity in today’s globally competitive

industrial environment for every employee’s
efforts to focus on helping the company to
achieve its strategic goals.

An Introduction to Appraising Performance

 Why appraise performance?

 Providing employee training and feedback
 o The semiannual performance appraisal
review is an excellent time to meet with
employees to discuss their strengths and
weaknesses and how weaknesses can be
corrected.
 Making Promotions- This is used when
employers give the opportunity to employees
who deserve to be promoted based on a
specific scale
o Peter Principle: the promotion of
employees until they reach their highest
level of incompetence
 Making Termination Decisions- It is also used
when performance management techniques are
not successful, the results of a performance
review might suggest that the best course of
action is to terminate the employee.
 Conducting personnel research
o Personnel research is important especially in
organizations where union contracts forbid
the use of performance evaluations in
personnel decisions.
o Appraisals play an integral role in the
employer’s performance management process.
o Appraisals help in planning for correcting
deficiencies and reinforce things done correctly.
o Appraisals, in identifying employee strengths
and weaknesses, are useful for career planning.
o Appraisals affect the employer’s salary raise
decisions.
The Components of an Effective
Performance Management Process
 Direction sharing
 Role clarification
 Goal alignment
 Developmental goal setting
 Ongoing performance monitoring
 Ongoing feedback
 Coaching and support
 Performance assessment (appraisal)
 Rewards, recognition, and compensation
 Workflow and process control and return
Why do some appraisal programs fail?
Reasons Appraisal Programs Sometimes Fail
 Lack of top-management information and support
 Unclear performance standards
 Rater bias
 Too many forms to complete
 Use of the appraisal program for conflicting
(political) purposes.
SOURCES OF PERFORMANCE APPRAISAL
 Manager and/or Supervisor
o Appraisal done by an employee’s manager and
reviewed by a manager one level higher.
o It is the common type of performance appraisal is
the supervisor rating. They always see the end
result of an employee’s performance
 Self-Appraisal
o Appraisal done by the employee being evaluated,
generally on an appraisal form completed by the
employee prior to the performance interview.
o Allowing an employee to evaluate her own
behavior risk leniency and use nearly low
percentage by organizations
 Subordinate Appraisal
o Appraisal of a superior by an employee, which is
more appropriate for developmental than for
administrative purposes.
 Peer Appraisal
o Appraisal by fellow employees, compiled into a
single profile for use in an interview conducted
by the employee’s manager. They often see the
employee’s actual behavior.
Why peer appraisals are not used more often:
1. Peer ratings are simply a popularity contest.
2. Managers are reluctant to give up control over
the appraisal process.
3. Those receiving low ratings might retaliate
against their peers.
4. Peers rely on stereotypes in ratings.
 Team Appraisal
o Based on TQM concepts; recognizes team
accomplishment rather than individual
performance
 Customer Appraisal
o A performance appraisal that, like team
appraisal, is based on TQM concepts and seeks
 evaluation from both external and internal
customers
o They provide feedback on employee
performance by filing complaints or
complimenting a manager about one of her
employees.
360-Degree Performance Appraisal System Integrity
Safeguards
 Assure anonymity
 Make respondents accountable
 Prevent “gaming” of the system
 Use statistical procedures
 Identify and quantify biases
 a performance appraisal system in which
feedback is obtained from multiple sources such
as supervisors, subordinates, and peers.
Multiple-source feedback – a performance appraisal
strategy in which an employee receives feedback from
sources (e.g., clients, subordinates, peers) other than
just his/her supervisor.
What are the steps in performance appraisal?
An Introduction to Appraising Performance
Steps in Appraising Performance
1. Defining the job- Making sure that you and your
subordinate agree on his or her duties and job
standards.
2. Appraising performance - Comparing your
subordinate’s actual performance to the standards that
have been set; this usually involves some type of rating
form.
3. Providing feedback - Discussing the subordinate’s
performance and progress, and making plans for any
development required.
Designing the Appraisal Tool
 What to measure?
o Work output (quality and quantity)
o Personal competencies
o Goal (objective) achievement
 How to measure?
o Trait methods
o Behavioral methods
o Results methods
DETERMINE APPRAISAL METHODS TO ACCOMPLISH
GOALS
FOCUS OF THE APPRAISAL DIMENSIONS
Trait-Focused Performance Dimensions: A traitfocused
system concentrates on such employee attributes as
dependability, honesty, and courtesy
Competency-Focused Performance Dimensions:
Concentrating on employee’s traits, competencies,
knowledge, skills, and abilities.
The advantage to organizing dimensions by
competencies is that it is easy to provide feedback and
suggest the steps necessary to correct deficiencies.
Task-Focused Performance Dimensions- These
dimensions are organized by the similarity of tasks that
are performed. The advantage of this approach is that
because supervisors are concentrating on tasks that
occur together
Goal-Focused Performance Dimensions - It is to
organize the appraisal on the basis of goals to be
accomplished by the employee. The advantage of a
goal-focused approach is that it makes it easier for an
employee to understand why certain behaviors are
expected.
Contextual Performance - Psychologists found out that
the effort an employee makes to get along with peers,
improve the organization, and perform tasks that are
needed but are not necessarily an official part of the
employee’s job description. It is important because they
also tend to be similar across jobs.
WEIGHING DIMENSIONS
Grading systems in the classes you have taken provide
good examples of weighting dimensions. This is to help
organizations to discover what dimensions suits them
most
OBJECTIVE MEASURES
Quantity of Work. Evaluation of a worker’s
performance in terms of quantity is obtained by simply
counting the number of relevant jo behaviors that take
place.
Quality of Work. Quality is usually measured in terms of
errors, which are defined as deviations from a standard.
Attendance. Measured in three criteria: Absenteeism,
tardiness, and tenure
Safety. Usually used for research purposes, but it can
also be used for employment decisions such as
promotions and bonuses.
PERFORMANCE APPRAISAL METHODS
1. Trait Methods
 Graphic Rating-Scale Method
o A trait approach to performance appraisal
whereby each employee is rated according to
a scale of individual characteristics.
o It is the most commonly used scale with 5 to
10 dimensions accompanied by words such as
“excellent” and “poor” anchoring the ends
 Mixed-Standard Scale Method
o An approach to performance appraisal similar
to other scale methods but based on
comparison with (better than, equal to, or
worse than) a standard.
 Forced-Choice Method
o Requires the rater to choose from statements
designed to distinguish between successful
and unsuccessful performance.
1. ______ a) Works hard _____ b) Works quickly
2. ______ a) Shows initiative _____ b) Is responsive to customers
3. ______ a) Produces poor quality _____ b) Lacks good work habits
 Essay Method
o Requires the rater to compose a statement
describing employee behavior.
o The rater checks statements on a list that the
rater believes are characteristic of the
employee’s performance or behavior.
o This list is used to force the supervisor to
concentrate on the relevant behaviors that fall
under a dimension.
 Behaviorally Anchored Rating Scale (BARS)
o
Consists of a series of vertical scales, one for
each dimension of job performance; typically
developed by a committee that includes both
subordinates and managers.
 Behavior Observation Scale (BOS)
o A performance appraisal that measures the
frequency of observed behavior (critical
incidents).
o Preferred over BARS for maintaining
objectivity, distinguishing good performers
from poor performers, providing feedback,
and identifying training needs.
3. Results Methods
 Productivity Measures
o Appraisals based on quantitative measures
(e.g., sales volume) that directly link what
employees accomplish to results beneficial to
the organization.
 Criterion contamination
 Focus on short-term results
 Management by Objectives (MBO)
o A philosophy of management that rates
performance on the basis of employee
achievement of goals set by mutual
agreement of employee and manager.
Management by Objectives (MBO)

2. Behavioral Methods Involves setting specific measurable goals with each

employee and then periodically reviewing the progress
 Critical Incident Method made.
o Critical incident
 An unusual event that denotes superior 1. Set the organization’s goals.
or inferior employee performance in 2. Set departmental goals.
3. Discuss departmental goals.
some part of the job
4. Define expected results (set individual
 The manager keeps a log or diary for each
goals).
employee throughout the appraisal 5. Performance reviews.
period and notes specific critical incidents 6. Provide feedback.
related to how well they perform.
 Behavioral Checklist Method
Computerized and Web-Based Performance Appraisal
 Performance appraisal software programs
o Keep notes on subordinates during the year.
o Electronically rate employees on a series of
performance traits.
o Generate written text to support each part
of the appraisal.
 Electronic performance monitoring (EPM)
o Having supervisors electronically monitor the
amount of computerized data an employee
is processing per day, and thereby his or her
performance.
Employee Comparisons - this is to reduce leniency from
employees.
Other Methods - Ranking
 Performance of an employee is ranked relative
to the performance of others
 Three of the more commonly used ranking
methods are
o Alternation
o Paired comparison
o Forced distribution
Alternation Ranking
 Lists names of employees to be rated on the left
side of a sheet of paper
 Rater chooses most valuable employee on the
list, crosses that name off the left-hand list, and
puts it at the top of the column on the right-
hand side of the paper
 Appraiser then selects and crosses off name of
least valuable employee from left-hand column
and moves it to bottom of right-hand column
 Rater repeats this process for all names on the
left-hand side of the paper
 Resulting list of names in right-hand column
gives a ranking of employees from most to least
valuable
Paired Comparison Ranking
Best illustrated with an example
 Suppose a rater is to evaluate six employees;
their names are listed on the left side of a sheet
of paper
 Evaluator then compares first employee with
second employee on a chosen performance
criterion, such as quantity of work
 If he or she believes the first employee has
produced more work than second employee, a
check mark is placed by the first employee’s
name
 Rater then compares the first employee to the
third, fourth, fifth, and sixth employee on the
same performance criterion, placing a check
mark by the name of employee who produced
most work in each paired comparison
 Process is repeated until each employee has
been compared to every other employee on all
of the chosen performance criteria
o Employee with most check marks is
considered to be best performer
o Employee with fewest check marks is
lowest performer
 Drawback
o It becomes unwieldy when comparing
more than five or six employees
Forced Distribution
 Requires rater to compare performance of
employees and place a certain percentage of
employees at various performance levels
o Assumes performance level in a group of
employees will be distributed according to a
bell-shaped, or “normal,” curve
 Drawback
o In small groups of employees, a bell-shaped
distribution of performance may not be
applicable
 Even where distribution may approximate a
normal curve, it is probably not a perfect
curve
 This means some employees probably will
not be rated accurately
 Ranking methods differ dramatically from other
methods in that one employee’s performance
 evaluation is a function of performance of other
employees in the job

Trait methods

 Advantages
o Are inexpensive to develop
o Use meaningful dimensions
o Are easy to use
 Disadvantages
o Have high potential for rating errors
o Are not useful for employee counseling
o Are not useful for allocating rewards
o Are not useful for promotion decisions

Behavioral methods

 Advantages
o Use specific performance dimensions
o Are acceptable to employees and
superiors
o Are useful for providing feedback
o Are fair for reward and promotion
decisions
 Disadvantages
o Can be time-consuming to develop/use
o Can be costly to develop
o Have some potential for rating error
Results methods
 Advantages
o Have less subjectivity bias
o Are acceptable to employees and
superiors
o Link individual to organizational
performance
o Encourage mutual goal setting
o Are good for reward and promotion
decisions
 Disadvantages
o Are time-consuming to develop/use
o May encourage short-term perspective
o May use contaminated criteria
o May use deficient criteria
 How to handle a formal written warning
o Purposes of the written warning
 To shake your employee out of bad
habits.
 Help you defend your rating, both to
your own boss and (if needed) to the
courts.
o Written warnings should:
 Identify standards by which employee is
judged.
 Make clear that employee was aware of
the standard.
 Specify deficiencies relative to the
standard.
 Indicates employee’s prior opportunity
for correction.
Appraisal Interview Guidelines

THE APPRAISAL INTERVIEW

 Types of appraisal interviews

 Satisfactory—Promotable
 Satisfactory—Not promotable
 Unsatisfactory—Correctable
 Unsatisfactory—Uncorrectable
RATER-RELATED ERRORS
Error of Central Tendency
 A rating error in which all employees are rated
about average.
Leniency or Strictness Error
 A rating error in which the appraiser tends to
give all employees either unusually high or
unusually low ratings.
Recency Error
 A rating error in which appraisal is based largely
on an employee’s most recent behavior rather
than on behavior throughout the appraisal
period.
Infrequent Observation
 Making inferences based on completed work or
employee personality traits
Contrast Error
 A rating error in which an employee’s
evaluation is biased either upward or downward
because of comparison with another employee
just previously evaluated.
Similar-to-Me Error
 An error in which an appraiser inflates the
evaluation of an employee because of a mutual
personal connection.
Distribution Errors
 Also known as leniency error
Halo Errors
 occurs when a rater allows either a single
attribute or an overall impression of an
individual to affect the ratings relevant to job
dimension
Proximity Errors
 occur when a rating made on one dimension
affects the score made on the following
dimension
Common Rater Errors (Another view)
RATER ERRORS: TRAINING AND FEEDBACK
Rating Error Training
 Observe other managers making errors
 Actively participate in discovering their
own errors
 Practice job-related tasks to reduce the
errors they tend to make
Feedback Skills Training
 Communicating effectively
 Diagnosing the root causes of
performance problems
 Setting goals and objectives
Frame-of-reference training: provides raters with job-
related information, practice in rating, and
communicate the organization’s definition of effective
performance
Creating the Total Performance
Management Process
 “What is our strategy and what are our goals?”
 “What does this mean for the goals we set for
our employees, and for how we train, appraise,
promote, and reward them?”
 What will be the technological support
requirements?
Factors that affect an Employee’s Performance  Tends to be narrowly focused and
oriented toward short-term
performance concerns.

 It is the systematic acquisition of skills,

rules, concepts, or attitudes that result
in improved performance.

 Designing training modules help to

improve employee performance or
behavior/attitude towards work
How to Avoid Appraisal Problems  The ultimate purpose of employee
training is to increase an organization’s
 Learn and understand the potential problems,
profits.
and the solutions for each.
 Use the right appraisal tool. Each tool has its • Development
own pros and cons.
 Effort that is oriented more toward
 Train supervisors to reduce rating errors such as
broadening an individual’s skills for the
halo, leniency, and central tendency.
future responsibilities.
 Have raters compile positive and negative
critical incidents as they occur.

TERMINATE EMPLOYEES

• Employment-at-Will Doctrine

The opinion of courts in most states that

employers have the right to hire and fire an employee
at will and without any specific cause

• Employment-at-Will Statements

Statements in employment applications and

company manuals reaffirming an organization’s right to
hire and fire at will.

Legal Reason for Terminating Employees

• Probationary Period
• Violation of Company Rules
• Inability to Perform
• Reduction in Force (Layoff)

TRAINING AND DEVELOPMENT

• Training

 Effort initiated by an organization to

foster learning among its members.
PHASE 1: CONDUCTING THE NEEDS ASSESSMENT
Purpose: It is to determine the types of training that are
needed in an organization; It is also to identify the
extent to which training is a practical means of
achieving an organization’s goals
• Organization Analysis
 An examination of the environment,
strategies, and resources of the
organization to determine where
training emphasis should be placed.
 It is to determine those organizational
factors [Cost/Finances, Resources
(Venue, time, facilitator), Employee
satisfaction] that either facilitate or
inhibit training effectiveness
 Importance:
– It is for the organization not to
over or underspend
– Ensures training modules are
applicable to the needs
identified
– Focuses on the long-term
development of the
organization
• Task Analysis
 The process of determining what the
content of a training program should be
on the basis of a study of the tasks and
duties involved in the job.
 Time-efficient but can be expensive
 Common methods: Interviews,
Observation, and Task inventories
• Person Analysis
 A determination of the specific
individuals who need training.
PHASE 2: DESIGNING THE TRAINING PROGRAM
• Instructional Objectives
o Represent the desired outcomes of a
training program
– Performance-centered
objectives
o Provide a basis for choosing methods
and materials and for selecting
the means for assessing
whether the instruction
will be successful.
• Trainee Readiness and Motivation
o Strategies for Creating a Motivated
Training Environment:
– Use positive reinforcement.
– Eliminate threats and
punishment.
– Be flexible.
– Have participants set personal
goals.
– Design interesting instruction.
– Break down physical and
psychological obstacles to
learning.
 Principles of learning
o Focus on learning and transfer
 Goal setting- “What’s the
value?”
 Meaningfulness of presentation
 Behavioral modeling
 Recognition of individual
learning differences
o Focus on method and process
 Active practice and repetition
 Whole vs. part-learning
 Massed-vs.-distributed learning
 Feedback and reinforcement
 Characteristics of Successful instructors
o Knowledge of the subject
o Adaptability
o Sincerity
o Sense of humor
o Interest
o Clear instructions
o Individual assistance
o Enthusiasm
PHASE 3: IMPLEMENTING THE TRAINING PROGRAM/
TRAINING DELIVERY
 Choosing the instructional method
o Nature of training
o Type of trainees
o Organizational extent of training
 o Importance of training outcomes
 Training methods for Nonmanagerial
Employees
1. On-the-Job Training (OJT)
2. Internship Programs
3. Classroom Instruction
4. Programmed Instruction
5. Audiovisual Methods
6. Simulation Method
7. E-Learning
o On- the-job training (OJT)
o Method by which employees are given
hands-on experience with instructions
from their supervisor or other trainer.
1. Coaching
2. Understudy assignments
3. Job rotation and lateral
transfers
4. Special projects & junior boards
5. Action learning
6. Managerial staff meetings
7. Planned career progressions
8. Modeling
Job Rotation – An employee performs several
different jobs within an organization. This is
commonly used for managerial trainings
Cross-Training – Employees are deployed to a
different type of task but within the job family. It is
to input additional skills related to the employees’
current abilities
Learning through Apprentice Training - It is when an
individual usually takes several hours of formal
classes each year and works with an expert for
several years to learn a particular trade or to become
eligible to join a trade union
 Used in crafts and trades
 144 hours of formal class work each year
 Work with an expert (usually 4 years)
Learning through Coaching and Mentoring
• Coaching - experienced employees working with
new employees and professional coaches who
work with all employees.
– Problems
• Not all employees are good
coaches
• Coaching can lower the coach’s
work productivity
– Pass through programs and corporate
coaches can alleviate problems
• Mentoring – It is s a form of coaching that has
recently received much attention.
– Mentoring is less formal than coaching
– Good mentors can be difficult to find
• Performance Appraisal – Introducing promotions,
increase in compensation, and future key
performance goal
o Internship programs
o Are jointly sponsored by colleges,
universities, and other organizations
that offer students the opportunity
to gain real-life experience while
allowing them to find out how they
will perform in work organizations.
o Classroom instruction
o Enables the maximum number of
trainees to be handled by the
minimum number of instructors.
o “Blended” learning—lectures and
demonstrations are combined
with films, DVDs, and videotapes
or computer instruction.
o Programmed Instruction
o Self-directed learning—use of
books, manuals, or computers to
break down subject matter content
into highly organized, logical
sequences that demand continuous
response on the part of the trainee.
o It is effective because it takes
advantage of several important
learning principles
o Self-Paced - Each trainee proceeds
at his own pace
o Actively Involved - This contrasts
sharply with the lecture method
o Small Units – It is when learning in
smaller amounts of material is
easier than learning larger amounts
o Audiovisual Methods
 o Video recordings, CDs and DVDs
o Teleconferencing and
videoconferencing
o Web conferencing, webinars, and
podcasts
o Communities of practice, blogs,
and wikis
o Simulation
o The simulation method emphasizes
realism in equipment and its
operation at minimum cost and
maximum safety.
o Used when it is either impractical
or unwise to train employees on
the actual equipment used on the
job.
o E-Learning
o Learning that takes place via web-
based training and computer-based
training (CBT)
o Allows the firm to bring the training
to employees
o Allows employees to customize
their own learning in their own
time and space (just-in-time
learning)
o Provides continuously updated
training materials
Distance Learning
Asynchronous
o Employees complete the training at
their own pace and at the time and
place of their choosing
Synchronous
o Employees complete the training at the
same time and the same place although
they may be in difference physical
locations
o Webinars, webcasts, and
teleconferences are common methods
 Methods for Management development
1. On-the Job Experiences
2. Seminars and Conferences
3. Case Studies
4. Management Games and Simulations
5. Role-Playing
6. Behavior Modeling
o On-the-job experiences
o Coaching
o Understudy Assignment
o Job Rotation
o Lateral Transfer
o Special Projects
o Action Learning
o Staff Meetings
o Planned Career Progressions
o Case studies
The use of case studies is most appropriate
when:
o Analytic, problem-solving, and
critical thinking skills are most
important.
o The KSAs are complex and
participants need time to master
them.
o Active participation is desired.
o The process of learning (questioning,
interpreting, and so on) is as
important as the content.
o Team problem solving and
interaction are possible.
o These are similar to leaderless group
discussions and situational interview
problems
o Role playing
Successful role play requires that instructors:
o Ensure that group members are
comfortable with each other.
o Select and prepare the role players by
introducing a specific situation.
o Prepare the observers by giving them
specific tasks
(such as evaluation or feedback).
o Guide the role-play enactment
through its bumps
(because it is not scripted).
o Discuss the enactment and prepare
bulleted points of what was learned.
o Tuition Assistance Programs
o About half of all large corporations offer their
employees tuition assistance if they take
courses related to the firms’ businesses.
o Corporate Universities
 o It’s not unusual for large corporations to have o The simplest and most common
their own “universities” where they train their approach to training evaluation is
employees and future managers. assessing trainees.
o Potential questions might include the
MOTIVATING EMPLOYEES following:
– Attendance (“On the Clock”) – What were your learning goals for
– Relate the training to an employee’s this program?
immediate job – Did you achieve them?
– Make the training interesting – Did you like this program?
– Increase employee buy-in – Would you recommend it to others
– Provide incentives who have similar
– Provide food learning goals?
– Reduce the stress associated with – What suggestions do you have for
attendance improving the program?
PERFORMING WELL IN TRAINING – Should the organization continue to
offer it?
Providing Incentives for Learning
o Learning
– Employees motivated to learn perform better in o Checking to see whether they actually
training than their less motivated counterparts learned anything.
– This motivation to learn is often related to the o Testing knowledge and skills before
perception that there is an incentive to learning beginning a training program gives a
Skill-based Pay baseline standard on trainees that can
– An employee participates in a training program be measured again after training to
that is designed to increase a particular skill an determine improvement.
employee needs either to be promoted or to o However, in addition to testing trainees,
receive a pay raise test employees who did not attend the
training to estimate the differential
effect of the training.

o Behavior
Interest o Transfer of Training
– Employees will be more motivated to learn when o Effective application of principles
the training program is interesting. learned to what is required on the
– A topic can be made interesting by making it job.
relevant to the employees’ lives. o Maximizing the Transfer of Training
1. Feature identical elements
Feedback 2. Focus on general principles
3. Establish a climate for transfer.
– Giving suggestions for rooms of improvement,
4. Give employees transfer
positive and negative feedback helps on tasks at
strategies
hand
o Results, or Return on Investment(ROI)
o Measuring the Utility of Training Programs
PHASE 4: EVALUATING THE TRAINING PROGRAM o Calculating the benefits derived from
training:
 Measuring program effectiveness
– How much did quality improve because
o Criterion 1: Trainee reactions
of the training program?
o Criterion 2: Extent of learning
– How much has it contributed to profits?
o Criterion 3: Learning transfer to job
o Criterion 4: Results assessment
o Participant Reactions
 – What reduction in turnover and wasted
materials did the company get after
training?
– How much has productivity increased
and by how much have costs been
reduced?
o Return of Investment
o Viewing training in terms of the extent to
which it provides knowledge and skills
that create a competitive advantage and
a culture that is ready for continuous
change.
o ROI = Results/Training Costs
– If the ROI ratio is >1, the benefits of
the training exceed the cost of the
program
– If the ROI ratio is <1, the costs of the
training exceed the benefits.
ADDITIONAL TRAINING AND DEVELOPMENT
PROGRAMS
 Organization-wide training programs
o Orientation training
o Basic skills training
o Team and cross-training
o Diversity training
 Orientation
o A formal process of familiarizing new
employees with the organization, their
jobs, and their work units.
o Orientation helps new employees: Feel
welcome and at ease, Understand the
organization, Know what is expected in
work and behavior, and Begin the
socialization process.
o Benefits:
1. Lower turnover
2. Increased productivity
3. Improved employee morale
4. Lower recruiting and training costs
5. Facilitation of learning
6. Reduction of the new employee’s
anxiety
Onboarding
o The process of systematically socializing
new employees to help them get “on
board” with an organization. Onboarding
goes beyond just orienting new employees
to their new environments. It brings them
into the organization’s fold so that they
truly feel as if they are a part of it. This is
important because new hires are at a high
risk of quitting.
 Basic Skills Training
o Basic skills have become essential
occupational qualifications, having
profound implications for product quality,
customer service, internal efficiency, and
workplace and environmental safety.
 Typical basic skills:
o Reading, writing, computing, speaking,
listening, problem solving, managing
oneself, knowing how to learn, working as
part of a team, leading others.
 Team Training Issues
o Team building is a difficult and
comprehensive process.
1. Team development is not always a
linear sequence of “forming, storming,
norming, and performing.”
2. Additional training is required to
assimilate new members.
3. Behavioral and process skills need to be
acquired through participative
exercises.
 Cross-Training
o The process of training employees to do
multiple jobs within an organization
o Gives firms flexible capacity.
o Cuts turnover
o Increase productivity
o Pares down labor costs
o Lays the foundation for careers rather
than
dead-end jobs.
 Types of Diversity Training
o Awareness building
o Helps employees appreciate the
benefits of diversity
o Skill building
o Provides employees with the KSAs
necessary for working with people who
are different from them
ESTABLISHING STRATEGIC PAY PLANS
 Employee compensation - All forms of pay or
rewards going to employees and arising from
their employment.
 Direct financial payments - Pay in the form of
wages, salaries, incentives, commissions, and
bonuses.
 Indirect financial payments- Pay in the form of
financial benefits such as insurance.
The wage based workers have to work daily to earn
money for their livelihood and there is no paid leaves
concept for daily wage earners. whereas, the salaried
employees can avail paid leaves, sick leaves, perks,
etc. which is a huge benefit to the salaried employees.
From the above discussion, it is evident that the wages
and salaries are different and cater different needs of
different people.
THE WAGE MIX—INTERNAL FACTORS
Employer’s Compensation Strategy
 Establishes the internal wage
relationship among jobs and skill levels
 Sets organization compensation policy
to lead, lag, or match competitors’ pay.
 Rewards employee performance
 Guides administrative decisions
concerning elements of the pay system
such as overtime premiums, payment
periods, and short-term or long-term
incentives.
Worth of a Job
 Establishing the internal wage
relationship among jobs and skill levels.
Employee’s Relative Worth
 Rewarding individual employee
performance
Employer’s Ability-to-Pay
 Having the resources and profits to pay
employees.
THE WAGE MIX—EXTERNAL FACTORS
Labor Market Conditions
 Availability and quality of potential
employees is affected by economic
conditions, government regulations and
policies, and the presence of unions.
Area Wage Rates
 A firm’s formal wage structure of rates
is influenced by those being paid by
 other area employers for comparable
jobs.
Cost of Living
 Local housing and environmental
conditions can cause wide variations in
the cost of living for employees.
 Inflation can require that compensation
rates be adjusted upward periodically
to help employees maintain their
purchasing power.
 Consumer Price Index (CPI)
– A Bureau of Labor Statistics
measure of the average change
in prices over time in a fixed
“market basket” of goods and
services
Collective Bargaining
 Escalator clauses in labor agreements
provide for quarterly upward cost-of-
living (COLA) wage adjustments for
inflation to protect employees’
purchasing power.
 Unions bargain for real wage increases
that raise the standard of living for their
members.
 Real wages are increases larger than
rises in the consumer price index; that
is, the real earning power of wages.
COMPENSATION POLICY ISSUES
 Pay for performance
 Pay for seniority
 The pay cycle
 Salary increases and promotions
 Overtime and shift pay
 Probationary pay
 Paid and unpaid leaves
 Paid holidays
 Salary compression
 Geographic costs of living differences
 Salary compression
 A salary inequity problem, generally caused by
inflation, resulting in longer-term employees
in a position earning less than workers
entering the firm today.
EQUITY AND ITS IMPACT ON PAY RATES
The equity theory of motivation
States that if a person perceives an inequity, the person
will be motivated to reduce or eliminate the tension
and perceived inequity.
Forms of Equity
External equity - How a job’s pay rate in one company
compares to the job’s pay rate in other companies.
Internal equity -How fair the job’s pay rate is, when
compared to other jobs within the same company
Individual equity - How fair an individual’s pay as
compared with what his or her co-workers are earning
for the same or very similar jobs within the company.
Procedural equity - The perceived fairness of the
process and procedures to make decisions regarding the
allocation of pay.
METHODS TO ADDRESS EQUITY ISSUES
Salary surveys - To monitor and maintain external
equity.
Job analysis and job evaluation - To maintain internal
equity,
Performance appraisal and incentive pay - To maintain
individual equity.
Communications, grievance mechanisms, and
employees’ participation - To help ensure that
employees view the pay process as transparent and fair.
WHAT ARE THE STEPS IN ESTABLISHING PAY RATES?
Establishing Pay Rates
The Salary Survey
Establishing Pay Rates
Step 1. The Salary Survey
Step 1. The salary survey Calculating a total point value for the job by adding up
the corresponding points for each factor.
Aimed at determining prevailing wage rates.
Job Evaluation Methods:
A good salary survey provides specific wage rates for
2. Ranking
specific jobs.
Ranking each job relative to all other jobs, usually
Formal written questionnaire surveys are the most
based on some overall factor.
comprehensive, but telephone surveys and newspaper
ads are also sources of information. Steps in job ranking:

Benchmark job: A job that is used to anchor the Obtain job information.
employer’s pay scale and around which other jobs are
Select and group jobs.
arranged in order of relative worth.
Select compensable factors.
Sources for Salary Surveys
Rank jobs.
Sources for Salary Surveys
Combine ratings.
Consulting firms
Job Evaluation Methods:
Professional associations
3. Job Classification
Government agencies
Raters categorize jobs into groups or classes of jobs
Department of Labor & Employment that are of roughly the same value for pay purposes.

National Wages & Productivity Board Classes contain similar jobs.

Establishing Pay Rates (cont’d) Grades are jobs that are similar in difficulty but
Step 2. Job Evaluation otherwise different.

Establishing Pay Rates (cont’d) Jobs are classed by the amount or level of
Step 2. Job Evaluation compensable factors they contain.

Step 2. Job evaluation Example of A Grade Level Definition

A systematic comparison done in order to determine Job Evaluation Methods:

the worth of one job relative to another. 4. Factor Comparison

Compensable factor Each job is ranked several times—once for each of

several compensable factors.
A fundamental, compensable element of a job, such as
skills, effort, responsibility, and working conditions. The rankings for each job are combined into an overall
numerical rating for the job.
Establishing Pay Rates (cont’d)
Computerized Job Evaluations
Job Evaluation Methods
A computerized system that uses a structured
Job Evaluation Methods:
questionnaire and statistical models to streamline the
1. Point Method
job evaluation process.
A quantitative technique that involves:
Advantages of computer-aided job evaluation (CAJE)
Identifying the degree to which each compensable
Simplify job analysis
factors are present in the job.
Help keep job descriptions up to date
Awarding points for each degree of each factor.
Increase evaluation objectivity
Reduce the time spent in committee meetings
Ease the burden of system maintenance
Establishing Pay Rates
Step 3. Group Similar Jobs into Pay Grades
Establishing Pay Rates (cont’d)
Step 3. Group Similar Jobs into Pay Grades
Step 3. Group Similar Jobs into Pay Grades
A pay grade is comprised of jobs of approximately
equal difficulty or importance as established by job
evaluation.
Point method: the pay grade consists of jobs falling
within a range of points.
Ranking method: the grade consists of all jobs that fall
within two or three ranks.
Classification method: automatically categorizes jobs
into classes or grades.
Establishing Pay Rates (cont’d)
Step 4. Price each Pay Grade
Step 4. Price Each Pay Grade
— Wage Curve
Shows the pay rates currently paid for jobs in each pay
grade, relative to the points or rankings assigned to
each job or grade by the job evaluation.
Shows the relationships between the value of the job
as determined by one of the job evaluation methods
and the current average pay rates for your grades.
Wage Curve
A wage curve displays the current pay rates for various
jobs within a pay grade in relation to their company
ranking.
This is usually done during the job evaluation process
as a way to ensure that employees receive fair
compensation for their skill and education level.
Wage curves sometimes depict a company’s current
salary rate in contrast to the salary rate of other
companies in the same industry.
When a curve is used for this purpose, it allows the
company to see what competitors are paying their
workers. The use of a wage curve is an important
element of the wage and salary survey process, and it
is usually created using human resource data, and at
times, employee-reported data.
Plotting a Wage Curve
Establishing Pay Rates (cont’d)
Step 5. Fine-tune Pay Rates
Step 5. Fine-tune pay rates
Developing pay ranges
Flexibility in meeting external job market rates
Easier for employees to move into higher pay grades
Allows for rewarding performance differences and
seniority
Correcting out-of-line rates
Raising underpaid jobs to the minimum of the rate
range for their pay grade.
Freezing rates or cutting pay rates for overpaid (“red
circle”) jobs to maximum in the pay range for their pay
grade.
Wage Structure
Compensation Administration Checklist
Pricing Managerial and Professional Jobs
Pricing Managerial and Professional Jobs
Compensating managers
Base pay: fixed salary, guaranteed bonuses.
Short-term incentives: cash or stock bonuses
Long-term incentives: stock options
Executive benefits and perks: retirement plans, life
insurance, and health insurance without a deductible
or coinsurance.
Pricing Managerial and Professional Jobs
What Really Determines Executive Pay?
CEO pay is set by the board of directors taking into
account factors such as the business strategy,
corporate trends, and where they want to be in a short
and long term.
Firms pay CEOs based on the complexity of the jobs
they filled.
Boards are reducing the relative importance of base
salary while boosting the emphasis on performance-
based pay.
Compensating Professional Employees
Employers can use job evaluation for professional jobs.
Compensable factors focus on problem solving,
creativity, job scope, and technical knowledge and
expertise.
Firms use the point method and factor comparison
methods, although job classification seems most
popular.
Professional jobs are market-priced to establish the
values for benchmark jobs.
What Is Competency-based Pay?
Competency-based pay
Where the company pays for the employee’s range,
depth, and types of skills and knowledge, rather than
for the job title he or she holds.
Competencies
Demonstrable characteristics of a person, including
knowledge, skills, and behaviors, that enable
performance.
Why Use Competency-Based Pay?
Traditional pay plans may actually backfire if a high-
performance work system is the goal.
Paying for skills, knowledge, and competencies is more
strategic.
Measurable skills, knowledge, and competencies are
the heart of any company’s performance management
process.
Competency-Based Pay in Practice
Main components of skill/competency/ knowledge–
based pay programs:
A system that defines specific skills, and a process for
tying the person’s pay to his or her skill
A training system that lets employees seek and acquire
skills
A formal competency testing system
A work design that lets employees move among jobs
to permit work assignment flexibility.
Competency-Based Pay:
Pros and Cons
Pros
Higher quality
Lower absenteeism and fewer accidents
Cons
Pay program implementation problems
Cost implications of paying for unused knowledge,
skills and behaviors
Complexity of program
Uncertainty that the program improves productivity
Other Compensation Trends
Broadbanding
Consolidating salary grades and ranges into just a few
wide levels or “bands,” each of which contains a
relatively wide range of jobs and salary levels.
Wide bands provide for more flexibility in assigning
workers to different job grades.
Lack of permanence in job responsibilities can be
unsettling to new employees.
Broadbanded Structure and How It Relates to
Traditional Pay Grades and Ranges
Comparable Worth
Comparable worth
Refers to the requirement to pay men and women
equal wages for jobs that are of comparable (rather
than strictly equal) value to the employer.
Seeks to address the issue that women have jobs that
are dissimilar to those of men and those jobs often
consistently valued less than men’s jobs.
Compensation and Women
Factors lowering the earnings of women:
Women’s starting salaries are traditionally lower.
Salary increases for women in professional jobs do not
reflect their above-average performance.
In white-collar jobs, men change jobs more frequently,
enabling them to be promoted to higher-level jobs
over women with more seniority.

In blue-collar jobs, women tend to be placed in

departments with lower-paying jobs.

Key Terms