Human Resource Management: An International Perspective Fachhochschule Ludwigshafen am Rhein Dr. Yvonne Stedham Course Materials available on http://www.scsr.nevada.edu/~ystedham/ Introductions Instructor Students – Table Tents Name Expected graduation Work Experience Traveling and Languages Interest in HR Aspirations Relevance of this Course What is HRM? HRM Functions? What is the relationship between HR and organizational performance? Why would HR practices differ from country to country? HR trends and practices in the U.S. Course Overview This course was designed to introduce students to the issues that emerge from performing the human resource management function in an international context. The focus of the course is on the relevance of the human resource management function to the performance of an organization. The relationship between the external environment of an organization and human resource management (HRM) will be explored with a particular emphasis on the effect of cultural differences on management processes. Current HRM trends and practices in the U.S. will be reviewed. Relevant legal conditions, as well as trends and developments in Employee Staffing and Selection and Compensation will addressed. HR and Organizational Performance What is an organization? What is organizational effectiveness? How does HR contribute? HR and Organizational Performance What is an organization? Why do organizations exist? Organizations = People Mission, goals, objectives --- concerted effort; efficiency; effectiveness. When is an organization effective? Distinguish between efficiency and effectiveness. Distinguish effectiveness measures for the short, intermediate, and long run. Measurement of organizational effectiveness Long run? Intermediate run? Short run? A contingency approach The Organization T h e E x te rn a l E n v iro n m e n t E conom y S o c ia l E n v iro n m e n t T e c h n o lo g ic a l E n v iro n m e n t P o litic a l E n v iro n m e n t T h e In te rn a l E n v iro n m e n t P e o p le B u s in e s s S tra te g y P ro c e s s e s S tru c tu re C u ltu re E ffe c tiv e n e s s Strategic Planning Scanning the environment: SWOT Vision Mission Goals Objectives Strategies and Tactics Performance Indicators The International Organization T h e E x te rn a l E n v iro n m e n t C u ltu re M u ltip le E conom y M u ltip le S o c ia l E n v iro n m e n t T e c h n o lo g ic a l E n v iro n m e n t P o litic a l E n v iro n m e n t T h e In te rn a l E n v iro n m e n t P e o p le B u s in e s s S tra te g y P ro c e s s e s S tru c tu re C u ltu re E ffe c tiv e n e s s HR and Org. Performance Individual effectiveness is the foundation for organizational effectiveness. Individual effectiveness depends on …. HR and Org. Performance Individual effectiveness = f(Ability,Motivation) Individual effectiveness = Ability * Motivation HR and Org. Performance Match Individuals (Knowledge, Skills, Abilities and Needs) with Jobs (Requirements and Rewards) The HRM Framework T h e E x te rn a l E n v iro n m e n t E conom y S o c ia l E n v iro n m e n t L a b o r M a rk e t M a tc h H R A c tiv itie s : R e c ru itm e n t, S e le c tio n , T ra in in g , C o m p e n s a tio n , L a b o r re la tio n s In d iv id u a l *K S A ’s *N e e d s Job *K S A R e q u ire m e n ts *R e w a rd s Legal E n v iro n m e n t H R O u tc o m e s : J o b S a tis fa c tio n O rg . c o m m itm e n t A ttra c tio n R e te n tio n A tte n d a n c e P e rfo rm a n c e Course Format Syllabus HR and Org. Performance Strategic HRM Political Development and the Role of HR Reading: September 11 Economic Development and the Role of HR Agriculture/Land–Industrial/CapitalInformation/Knowledge Jeffrey Pfeffer What CEOs want from HR HR Leaders Case: Sun Micro Systems Globalization Reasons for becoming international Groups of four Why do companies internationalize? List specific reasons and purposes. At least three Reasons for becoming international Profit = Revenue – Cost = (Volume*Price) – Cost 1. A desire for continued growth. 2. Domestic market saturation 3. The potential to now exploit a new technological advantage 4. Preferable suppliers (quality, cost) 5. Labor market (supply, quality, cost) 6. Government involvement/restrictions 7. Reducing distance to customers (cost) 8. Tariff barriers 9. Increased foreign competition in home country 10. Reduce general business risk by diversifying into other countries Types of "international" organizations International organization:Any organization that exports to/imports from organizations in other countries with primarily domestic production Multidomestic. Multinational organization: An organization with operations in different countries but each is viewed as a relatively separate enterprise. Global organization: An enterprise structured so that national boundaries become blurred. The best people are hired irrespective of national origin. Transnational Globalization European Training and Development Journal Article – Engle/Stedham et al. HR and Org. Performance Strategic HRM HR Management Roles Administrative – record keeping, processing, ST, Examples? Operational – support, IT, Examples? Strategic – org-wide, LT, Examples? HR as a strategic partner: Involvement in strategic planning, decision-making on mergers, acquisitions, and downsizing, redesigning organizations and work processes, ensuring financial accountability for HR results, attracting and retaining human resources, developing human resource capabilities and competencies, identifying and rewarding performance HR Planning KSA’s requirements vs KSA availabilities Filling the gap International Issues Staffing and Compensation Country Specific External Conditions for HR List external conditions and trends that affect the HR function. Specify which function is affected. Create such a list first for Germany and then for the U.S. Groups of four Appoint a spokesperson and share with the class. External Environment Culture and Ethics – International HRM Why different answers for different countries? External Environment Culture and Ethics – International HRM Cultural differences What is culture? Cultural characteristics Social stratification, religion, education, language, political system, economic system Where do cultural differences come from? Kluckhohn and Strodbeck Six Values Orientation Dimensions Cultural dimensions All peoples have common life problems (?) – choose different solutions Six basic dimensions describe the cultural orientations of societies What is the nature of people? What is a person's relationship to nature? What is a person's relationship to other people? What is the primary mode of activity? What is the conception of space? What is the temporal orientation? External Environment Culture and Ethics – International HRM Self-Assessment Global Readiness Index and Personal Values Understanding your own values If you understand others you are learned, if you understand yourself you are wise! External Environment Culture and Ethics – International HRM Measuring Culture Geert Hofstede – IBM Culture’s Consequences Survey Hofstede Publications Hofstede, Geert (1980): Culture’s Consequences Hofstede, Geert (1991): Cultures and Organizations Hofstede, Geert (1984): Culture’s Consequences: International Differences in Work-Related Values Hofstede, Geert and Michael Harris Bond (1984): The Confucius Connection: from cultural roots to economic growth. Organizational Dynamics, 16, 4, 4-21 Hofstede Publications Hofstede, Geert (2001): Culture’s Consequences: Comparing Values, Behaviors, Institutions, and Organizations Across Nations. Hofstede, Geert (1994): VSM94: Values Survey Module 1994 Manual. Tilberg, Netherlands: IRIC. Hofstede, Geert and Bond, M.H. (1984): “Hofstede’s Culture Dimensions: An Independent Validation Using Rokeach’s Value Survey.” Journal of Cross-Cultural Psychology 15(4): 417-433. ___ Hofstede’s Cultural Dimensions Individualism/Collectivism Individualistic society – self and immediate family Collectivistic – group; give up freedom for security Masculinity/Femininity Masculine: aggressive; achievement; materialistic Feminine: emphasis is on relationships and quality of life Uncertainty Avoidance Acceptance of ambiguity and uncertainty; need for strict rules and regulations Power Distance Acceptance of unequal distribution of power and other attributes Confucian Dynamism or LT/ST ST – instant gratification LT – discipline and perseverance Compare Germany, the U.S. and Japan Ind – hi, mod, low? Masc vs Fem? Uncertainty A – hi, mod, low? Power distance - hi, mod, low? LT vs ST? Cultural Differences and HR Management Japan has the following cultural characteristics …. Japan is known for the following management approaches …. The U.S. has the following cultural characteristics …. The U.S. is known for the following management approaches …. Germany has the following cultural characteristics …. Germany is known for the following management approaches …. U.S. Japan Germany Individualism: 91 46 67 Power distance: 40 54 35 Uncertainty avoidance: 46 92 65 Masculinity: ST/LT: 62 29 95 80 66 25 Cultural Differences and HR Management Japan hi UNC, hi POW, Coll, MAS, LT Consensus, group based, long dm, lack of risk taking and creativity, life time employment U.S. low UNC, low POW, Ind, MAS, ST …. Delegation, participative management, emphasis on individual performance, creativity and risk taking Germany moderately hi UNC, low POW, Ind, ST Expert based, need for education and certification, delegation, participative management, extensive employee protection, somewhat risk averse André Laurent’s Research “Main reason for a hierarchical structure is so that everybody knows who has authority over whom.” “In order to have efficient work relationships, it is often necessary to bypass the hierarchical line.” “It is important for managers to have at hand the precise answers to most questions their subordinates may raise about their work.” Laurent’s Research “Main reason for a hierarchical structure is so that everybody knows who has authority over whom.” Germany 26% agree US 17% agree Japan 50% agree France, Italy, Spain – 43%, 42%, 34% “In order to have efficient work relationships, it is often necessary to bypass the hierarchical line.” Germany 45% disagree US 32% disagree France, Italy, Spain – 43%, 56%, 74% “It is important for managers to have at hand the precise answers to most questions their subordinates may raise about their work.” Germany 46% agree US 18% agree Japan 78% agree France, Italy, Spain – 53%, 66%, 77% External Environment Culture and Ethics – International HRM Ethics Questionnaire External Environment Culture and Ethics – International HRM What is “ethics”? Relevance? Different across cultures? Beekun/Stedham/Yamamura Papers Nike’s Voice Personnel demands attention overseas External Environment Culture and Ethics – International HRM Ethics Philosophies Consequentialist vs Non-consequentialist Consequentialist: Utilitarianism, Egoism Non-consequentialist: Justice, Inherent Morality International HRM The Expatriate Assignment Numbers 37,000 MNC’s worldwide Control 200,000 foreign affiliates 73 million employees In the U.S., MNC’s employ 3 mill Americans, 10% of the U.S. manufacturing workforce 80% of mid- and large-size U.S. companies send managers abroad 300,000 U.S. expatriates are on assignment at any given time Optimal level of internationalization? International HRM The Expatriate Assignment Staffing Philosophies Ethnocentric – Key positions are filled with PCN’s (parent country nationals), e.g., Procter & Gamble – Associate with higher incidence of IHRM problems Polycentric – Key positions are filled with HCN’s Geocentric or global – Best managers are recruited from within or outside the company regardless of nationality, TCN’s – used by European MNC’s, transpatriates, some U.S. companies (Philips, Heinz, Unilever, IBM) Regiocentric – Recruiting on a regional basis International HRM The Expatriate Assignment Expatriate Selection Relevant KSA’s? Technical, Managerial Adaptiveness Measurement SMILE: Speciality; management ability; international flexibility; language facility; endeavor (Matsushita) Spouse and Family Failure rates 40% on average; lower for European and Japanese Rosalie Tung: International HRM The Expatriate Assignment Expatriate Selection Failure rates 40% on average; lower for European and Japanese Rosalie Tung: Reasons Selection is based on headquarter criteria Lack of training, preparation, orientation Alienation/lack of support from headquarters Inability to adapt to local culture/work enviro Problems with spouse,family Compensation Poor programs fro career support/repatriation International HRM The Expatriate Assignment Training Cultural toughness – China, Brazil, India, Japan, Russia, Mexico, Saudi Arabia, South Korea, France Less than 1/3 of expatriates receive training Pre-departure training, postarrival training, reentry training Culture, language, everyday matters Cross-cultural training to ease the adjustment to the new environment by reducing “culture shock”: a state of disorientation and anxiety about not knowing how to behave in an unfamiliar culture International HRM The Expatriate Assignment Training Four stages of culture shock: Honeymoon Irritation and hostility Gradual adjustment Biculturalism Training techniques and Rigor of training Area studies Culture assimilators Language training Sensitivity training Field experiences Colgate – In-country training International HRM The Expatriate Assignment Training – Examples ABB (Asea Brown Bovari) rotates 500 managers around the world .. Every two to three years PesiCo orientation program for foreign managers … one year at U.S. bottling division plants Honda of America Japanese language, culture, lifestyle training .. Tokyo up to 3 years GE engineers and managers must have global perspective .. Regular language and cross-cultural training International HRM The Expatriate Assignment Compensation $100,000 manager in U.S. -> $300,000 in London, $1mill in Tokyo or Stockholm Equity and goodwill Purchasing power and standard of living Tax differentials and tax equalization Balance sheet approach Allowances – Cost of living, housing, education, home leave, shipping and storage Repatriation International HRM The Expatriate Assignment You have been assigned the mentor to an employee, John Smith, from the U.S. who will be working with you in your department for the next three years. His family, wife who is a computer programmer and two sons (13 and 15 years old), is coming with him. You are writing to John telling him about what to expect – on the job and in the community. Tell him about some of the cross-cultural conflicts he may run into with his co-workers and how he should handle them. You also want to give advice to each family member. Groups of four – make a list of relevant issues. International HRM The Expatriate Assignment Nancy Adler Paper – Female Expatriates Asia Pacific Journal of Human Resource Management – Stedham/Nechita paper – Comparing Theory and Practice of Expatriate Assignments HR Trends and Practices in the U.S. The Legal Environment Staffing and Selection Compensation and Benefits HR Trends and Practices in the U.S. The Legal Environment The employment relationship Discrimination legislation Legal Conditions in the U.S. The Employment Relationship – Equitable Exchange Psychological Contract Employment Contract Formal agreement, voluntary: Defines and governs the terms and conditions of the employment relationship; promises and expectations … change with time Written or oral, both are legally enforceable Sources of Laws and Regulations Common Law: England; Court-made Law; Case-by-case decisions Precedence (Germany and other country code-based law); States – develop and administer own common law. Constitutional Law: Supersedes; Prohibits deprivation of employment right without due process. Employment at Will Right of both parties to terminate the employment relationship at any time, for any reason (Tennessee Court in late 1900’s) If “set-term” contract …Termination for Just cause Failure to perform If “indeterminate-term” contract --- employment at will (common law); most are “at-will” Workplace Torts Breaches of legal duty by ER when establishing or modifying the initial relationship (common law) Tort Civil wrong = violation of a duty by the ER that leads to harm or damages suffered by others - Examples: 1. Fraud or misrepresentation: lie/mislead applicant when communicating conditions and terms -> ER violates a duty to be truthful in the presentation of information 2. Negligent hiring: ER violates duty to protect Ees and customers against unreasonable and foreseeable risk of harm Fair Labor Standards Act 1938 Minimum Wage $5.75 Lower for tipped employees Child Labor Age 16 – no restrictions Age 18 – harzardous occupations Age 14-15 – limitations on hours Fair Labor Standards Act 1938 Exempt vs Non-exempt Employees Exempt – executive, administrative, professional, outside sales; ER does not have to pay overtime Non-exempt – must be paid overtime Overtime Hours worked in excess of 40 hours must be compensated 1.5 the regular rate of pay Compensatory time off Illegal in private sector unless given at 1.5 rate Statutory Laws Derived from written statutes that are passed by legislative bodies such as Federal – Congress; State – Legislature/Assemblies; Local – Municipal/Councils Agencies: Interpret, administer, enforce law and publish rules and regulatory guidelines that are given “great deference” by courts. . DOL Department of Labor; OFCCP Office for Contract Compliance Programs; EEOC Equal Employment Opportunity Commission; Discrimination Legislation EEO Framework - Specific Laws U.S. Constitution 5th Amendment: Due Process of law --- Prohibition upon federal government; no person shall be deprived of life, liberty, or property; does not speak directly to specific subjects such as employment Courts prefer to defer to existing statutory laws because it they are more specific!! 14th Amendment: Prohibition for States to enacts any law that does not “guarantee” equal protection for all. Statutory Laws Civil Rights Act 1866 Right to make and enforce contracts for employment … for all citizens as enjoyed by white citizens. Civil Rights Act of 1871 Right to sue if deprived of any rights or privileges guaranteed by the Constitution and laws for ALL citizens. Must show intention. Equal Pay Act 1963 Equal pay for equal work regardless of SEX (female employees only); amendment to FLSA . Equal Pay Act “Equal” Work Substantially similar in terms of skill, effort, responsibilities, working conditions. Exceptions Seniority; Merit; Quantity of production; Note: If in violation of EPA, ER may not LOWER wages. Title VII of CRA 1964 Coverage: ERs with 15 or more employees; Federal, State, Local governments; Educational Institutions; Employment Agencies; Labor Unions Not covered: Until recently “Congress”; Private Clubs; Religious Organizations. CRA 1964: Several Titles each focusing on discrimination in a different “sectors” of society (education, right to vote,… ) Title VII focuses on discrimination in employment. Title VII 703 (a) Employer may not discriminate on the basis of race, color, national origin, sex, and religion in any employment decision. Title VII Color: White, black, yellow, brown, red. Race: Local geographic or global human population distinguished by genetically transmitted physical characteristics … Caucasian; Negro; Hispanic; Oriental; Indian. National Origin: Citizenship; Heritage; Any country, nation. Religion: All kinds; not associated with any of the other characteristics; Christian, Hindu, Muslim, Buddhist. Title VII 703 (b) …. Nondiscriminatory apprenticeship program 704 (a) …. Unlawful to discriminate … if opposed unlawful employment practice … assisted in TVII investigation. 704 (b) …. Prohibits ads concerning employment indicating preference for any of the prohibited factors. 1978 Amendment: Pregnancy Discrimination Act --- prohibits discrimination on the basis of pregnancy, childbirth, or related condition. Reinstatement right for similar position; no loss of seniority; coverage of disability insurance. Title VII Exemptions: that are written into the law Discrimination on the basis of the “protected factors” is permissible when such qualification is a bona-fide occupational qualification (BFOQ) = reasonably necessary to the operation of that particular business or enterprise; burden of proof is with ER; very narrowly interpreted --- preferences of ER, coworkers, clients are irrelevant. Seniority Systems: Bona fide seniority or merit systems are lawful if no intention to discriminate; job or departmental systems are not seen as “bona fide”, plant or company-wide systems are seen as “bona fide”. Exemptions to TVII Testing: Employer may give and act upon professionally developed ability tests if they are not used to discriminate on the basis of the protected factors. Preferential Treatment: It is unlawful to interpret TVII as requiring preferential treatment of individuals of protected groups - reverse discrimination National Security: Discrimination is permitted Further TVII Issues Fetal Protection -- Johnson Controls 1991: An employer’s exclusion of fertile women, but not fertile men, could not be justified on grounds that the rule protected the woman’s reproductive capacity and the physical welfare of the fetus. The safety qualification is limited to those instances where sex or pregnancy presents danger to customers or third parties. A fetus is not a “third party” whose safety is essential to the operation of the employer’s business, and thus cannot be the basis of a BFOQ. Sexual Harassment Quid pro quo Hostile work environment sexual harassment. Unwelcome sexual advances in exchange for a favorable employment condition. Employer is liable. ER liable even if the employer had no knowledge of the harassment. Pattern of behavior. Reasonable person standard. Training, Policy, and Complaint and Investigation Process. Sexual Harassment Examples Office Romance Stedham/Mitchell paper Executive Order 11246 Contractors doing business with federal government ($ amount of contract specified). Same provisions as TVII AND requires contractors to develop affirmative action plans: Formal, specific personnel programs that are designed to increase the participation of protected groups. Age Discrimination in Employment Act 1967 Amended 1986. Protects EEs and applicants who are 40 years old and above (no upper limit). No mandatory retirement age (except law enforcement officers, firefighters, tenured professors, executive under certain conditions, top policy makers). No reverse discrimination. Americans with Disabilities Act 1990 Since 1994 covers ERs with 15 or more EEs. 43 mill. disabled Americans. Protects Physical or mental impairment that substantially limits one or more life activities (walk, see, ..) Record of impairment Regarded as having impairment … about 1,000 disabilities incl. affective disorders, biochemically based disorders - AIDS, Cancer, Anxiety Disorders, Eating Disorders, Infertility, Epilepsy Disability evaluated with adjustive equipment (glasses) Americans with Disabilities Act How it protects .Punitive damages .Essential job functions .Reasonable accommodations .Restructuring of physical facilities .Perceptual restructuring … 1994 5,500 complaints (25% more than were expected) Sample Job Description Family and Medical Leave Act 1993 Employers with more than 50 employees have to provide 12 weeks of unpaid leave for family or medical emergencies. Employer must guarantee the employee the same or a comparable job. The employer must also pay the healthcare coverage for the EE --- which the EE has to be back if he/she fails to return to work. ERs are allowed to exempt “key” employees – defined as the highest paid 10% of their work force whose leave would cause substantial economic harm to the employer. Also exempt are EEs who have not worked at least 1,250 hours (25 hrs a week) in the previous 12 months. Enforcement of Laws and Court Process Filing a Discrimination Complaint Local EEO Agency NERC (Nevada Civil Rights Commission) EEOC Investigation Right to sue letter Evidence of Discrimination Intentional Discrimination Disparate Treatment: different standards applied to various groups Adverse or Disparate Impact: same standards are applied but disproportionately less minority applicants are selected Federal Court Process Presentation of evidence in TVII Burden of Proof shifts Plaintiff Defendant Prima Facie Evidence 1. Disparate Treatment McDonnell Rule: 4 conditions 2. Adverse Impact 80% or 4/5 Rule 1. Job-based/legitimate explanation 2. Business Necessity, BFOQ, Validation Plaintiff 1. Defendant pretext; true reason was rejection for prejudice 2. Other method Disparate Treatment: 4 Conditions- McDonnel Rule Plaintiff must show belongs to protected class applied and was qualified for the job despite the qualifications - was rejected position remained open and the employer continued to seek applications from persons with the complainant’s qualifications ->Applied also in ADEA cases Adverse Impact: 80% or 4/5 Rule Selection Ratios Number of nonminority applicants selected DIVIDED BY Number of nonminority applicants applied THIS IS = Nonminority selection ratio Number of minority applicants selected DIVIDED BY Number of minority applicants applied THIS IS = Minority selection ratio Adverse Impact Compare the two selection ratios If the ratio for nonminorities is smaller there may be evidence of discrimination If the ratio is less than 80% or 4/5 of the nonminority ratio, then there is evidence of adverse impact (because the difference in the ratios is statistically significant) Adverse Impact - Example 100 White applicants 100 African American applicants 20 of the White applicants are selected 5 of the African Americans are selected 20:100 = .2 Nonminority Selection Ratio 5:100 = .05 Minority Selection Ratio .05 : .2 = .25 This does not meet the 80% rule! Adverse Impact - Example 100 White applicants 100 African American applicants 20 of the White applicants are selected 16 of the African Americans are selected 20:100 = .2 Non-minority ratio 16:100 = .16 Minority ratio .16 : .2 = .80 meets the 80% rule HR Trends and Practices in the U.S. Staffing and Selection Measurement Principles Reliability and Validity Selection Methods Application forms and resumes Interview Assessment Centers Staffing and Selection The most important HR function Definitions Recruitment: Creating a pool of qualified applicants Staffing Mutual process by which the individual and the organization become matched to form the employment relationship. Mutual Process: Series of interrelated activities - R, S, DM, job offers, hiring. Selection Selection The process of obtaining and using information about job applicants to determine who should be hired. Focus here is on how to collect relevant info on applicants’ KSA’s. Recruitment How can we mess up? Recruitment Planning Relevant market Number of contacts Yield ratios Recruitment Recruitment Sources and Channels - Effectiveness Internal vs external recruitment Peter Principle Walk-ins Referrals College Employment Agencies and Professional Societies Advertising Temporary Employees Internet Realistic Job Previews Measurement in Selection Selection decisions are based on what information? Purpose is to …….. Measurement in Selection How can we mess up? Measure irrelevant KSA’s Measure KSA’s inaccurately Definition of Measurement Application of rules for assigning numbers to objects to represent quantities of attributes. Differences between applicant scores are due to actual differences in KSA’s. Rules Specified algorithms to assign numbers (She is a 10) – same results by different users Quality of Measures: Reliability How good a measure is my test? To what extent does the measure accurately capture the KSA we are interested in? The scores obtained on a measure are X obtained = X true + X error If there was no error in the measure, every time we apply the measure to the same person we should get the same score. A reliable measure is a consistent measure. The reliability of a measure reflects the measures consistency. Reliability Three methods to evaluate the reliability of a measure Each method focuses on a different source of measurement error. Measurement error are those factors that impact the obtained score but are not at all related to the attribute that is being measured. The methods: Test-Retest Reliability Parallel or Equivalent Forms Reliability Internal Consistency Reliability Split-Half and Odd-Even; Cronbach Alpha Spearman-Brown Adjustment Spearman-Brown Formula to Correct a Split-Half Reliability Coefficient r ttc nr 12 1 (n - 1)r 12 Where : r ttc the corrected split - half reliabilit y coefficien t for the total selection measure n number of times the test was increased in length r 12 the correlatio n between Parts 1 and 2 of the selection measure Reliability The conclusion that a measure is reliable can only be drawn if, and only if, the reliability coefficient (a correlation coefficient) is statistically significant (as determined by a t-test. Standard Error of Measurement meas x 1 - r xx Where : meas the standard error of measuremen t for measure X x the standard deviation of obtained score on measure X r x x the reliabilit y of measure X Reliability Important The difference in the score between two applicants is only significant if it is at least two times the standard error of measurement. Example: The standard error of measurement for a test is 1.5. Candidate A scores 18, candidate B scores 24 - does candidate B really have more of the attribute that is being measured? Quality of Measures: Validity Validity in Selection concerns the following question: How appropriate is it to make inferences from the scores on a measure to performance? Is the score a good predictor of performance? Is the score actually related to future performance? Relationship between reliability and validity Validity Three methods to evaluate the validity of a measure. Content Validity Criterion-Related (Empirical) Validity – Validity Coefficient Predictive Validity Concurrent Validity Content versus Face Validity Content Validity deals with the representative sampling of the content domain of a job by a selection measure Face Validity concerns the appearance of whether a measure is measuring what is intended Utility Analysis Using dollar-and-cents terms as well as other measures such as percentage increase in output, it shows the degree to which the use of a selection measure improves the quality of individuals selected over what would have happened if the measure had not been used. An Equation for Calculating the Utility of a Selection Program Expected Dollar Gain from Selection= NsrxySDyZx-NT(C) Expected Dollar Gain from Selection=return in dollars to the organization for having a valid selection program Utility Ns=number of job applicants selected rxy=validity coefficient of the selection procedure SDy=standard deviation of job performance in dollars Zx=average score on the selection procedure of those hired expressed in z or standardized score form as compared to the applicant pool NT=number of applicants assessed with the selection procedure C=cost of assessing each job applicant with the selection procedure Strategies for Selection Decision-Making Compensatory Model Multiple Hurdles Combination Profile Matching Application Forms and Resumes Information about the applicant’s background and present status -- brief and general OR long and detailed?? Based on .. Past behavior is a good predictor of future behavior To determine … minimum qualifications and general suitability for job; permanent record; Determine relative strengths and weaknesses It is assumed that all data collected are used Training and Experience Requirements Job-related training - formal and informal Type of training; length; quality Application Form Specific job-related experience and accomplishments Minimum qualifications Maintained Filing System: YES NO Used computer and Microsoft Word for Windows 2000 word processor to type letters and reports Used a Dictaphone to transcribe correspondence TE Evaluation Form Specific tasks are listed – indicate YES NO For YES, describe experience Application Likely candidate for Adverse Impact -- Why? Current forms -- 100% had at least 1 inappropriate question; on average 7 inappropriate questions. Are these questions acceptable? What do you really want to know? What was your maiden name? What is your date of birth? What is your age? What is your height and weight? What language do you commonly use? What is your religious faith? List the number and ages of your children? Do you have any physical or mental disabilities? List your birthplace. Have you ever been arrested? Do you own your car/residence? Application Forms ... Adverse Impact: High Validity: On average .1 -- corrected for attenuation .13 Select content Job-related - Job-related language Usefulness Fairness -- Face Validity Resumé U.S. Short and concise; dates; job related; achievements Groups Compare to German resumé References and Recommendations To verify information Assess applicant’s job experience Assess applicant’s effectiveness in those jobs -what done and how well?? References Sources of and methods to collect Reference Data Methods: In-person; Mail ; Letter of R; Phone Sources: Former ER; Personal; Investigative agencies; Public record; Usefulness of reference data Reliability: .4 or less Validity: .16-.26 Reference giver-better if immediate supervisor Old and new jobs are very similar? Adverse Impact ?? References .. Validity -- not much evidence -- favorable info -- job related better if content of the new and old job are very similar low validity because low reliability and restricted range Defamation of character Recommendations don’t use subjective info written consent by applicant ask only specific job-related info development of reference checking system Employment Interview KSA’s to be measured Validity Adverse Impact Employment Interview Research Interview does not add to selecting the most qualified candidate … because….. Interview Sources of problems impression formation human perception Improve the Validity of the Interview 1. Decide on location and seating 2. More than one interviewer – Panel 3. KSA’s to be measured: Measure interpersonal, communication skills 4. Job-related questions only - Multiple Questions (Behavioral Interview Questions) 5. Limit pre-interview info 6. Use a rating format 7. Train the interviewer Interview Simulation Role Play HR Trends and Practices in the U.S. Staffing and Selection - Selection Methods Assessment Centers Managerial positions Battery of tests Management, interpersonal, soft skills Physical Attractiveness Notion of Fit Emotional Intelligence Judge and Ferris (1992): The Elusive Criterion of Fit in HR Staffing The practice of selection strongly emphasizes a less tangible notion of fit between job applicant and the organization. How could “fit” be measured? Definition of “fit”: The degree to which the goals and values of an applicant or employee match those of employees considered successful in the organization. The notion of “liking” an applicant Why “fit”: control mechanism, homogeneity, job-related , predictability of public behavior The employment interview and “fit”; Impression Management Emotional Intelligence Daniel Goleman Developing emotional intelligence Five dimensions: Self-awareness: Realistic self assessment-how does this fir with my values; analyze gut feeling Managing emotions: anger, anxiety, sadness – controlling one’s impulses; manage stress; effect on ability to pay attention Motivating other: what moves us to action is emotion; optimism Showing empathy: read emotions in others; prevents acting in self interest Staying connected: emotions are not only contagious, they spread from the top down HR Trends and Practices in the U.S. Compensation and Benefits Theory Techniques Benefits Compensation and Benefits Exchange relationship Equity Internal Equity External Equity Individual Equity Internal Equity Worth of a job? Internal Equity Worth of a job? Input .. KSA’s Ouput Attributes … Complexity Internal Equity Develop of job hierarchy Job Evaluation Job Evaluation Methods Compensable Factors Ranking Classification Point Factor Method The Hay’s System – Know-How, Problem Solving, Accountability External Equity Myth of a market pay rate Published data Survey design Benchmark jobs Relevant market Level and range Administration Benefits Philosophy Leveling Integrating Internal and External Equity Scatterplot Regression Analysis – JE points and Market pay Market Pay Line Follow, lead, lag Pay grades – Height and Width; Overlap Compa Ratio, Red and green circle employees Pay Compression Individual Equity Money as a motivator? Individual Equity Motivation Theories Variable Pay Systems Individual: Piece rate, sales commission, bonuses, special recognitions, safety awards, attendance bonus Group (Team): Gainsharing, quality improvement awards, labor cost reduction payout Organization: Profit sharing, employee stock ownership options, executive stock options, deferred compensation Merit Pay Systems - Design Individual Equity Performance measurement? Size of reward – Purchasing power and recognition Type of reward Linkage to performance Pay Secrecy Example: Compensation at IBM Individual Equity Annual Pay Raises Exercise Attached Individually make decisions Groups decide Employee Benefits Compensation Package Direct vs Indirect Direct: Base Pay and Variable Pay Indirect: Benefits Composition 20% of direct pay in benefits For each $1.00 in pay additional 20 cents in benefits Employee Benefits Types of Benefits Government Mandated Security: Workers’ Compensation, Unemployment Compensation Retirement Security: Social Security Health Care: COBRA and HIPPA provisions Family Oriented: Family Medical Leave Act Time off: Military reserve, Jury, Election Employer Voluntary Employee Benefits Employer Voluntary Security: Supplemental UE benefits, Severance pay Retirement Security: Early retirement options, Pension plans, IRAs, 401 (k) plans Health Care: Medical, Dental, Vision, Prescription Drugs, EAP’s, Wellness Programs, HMO’s Financial, Insurance: Life, Disability, Educational assistance Family Oriented: Dependent Care, Child Care, Alternative work arrangements Time off: Lunch and rest breaks, holidays and vacations, funeral and bereavement leaves Social and recreational Employee Benefits Package design? Employee Benefits Employee preferences Competition Cost Attraction and retention Employee Benefits Social Security Act 1935 Social Security – Retirement employer and employee pay Employer – payroll tax to fund UE (3.5%) of the first $6,000 earned by each worker Employer – pays Workers’ Comp, by State Time off benefits most expensive – 5 to 13% of total compensation Employee Benefits COBRA – Consolidated Omnibus Budget Reconciliation Act: require extended health care coverage for employers with 20 or more employees HIPPAA – Health Insurance Portability and Accountability Act HMO – Health Maintenance Organization Employee Benefits Flexible benefits plans – Cafeteria-Style benefits plans Work Life Balance Reading Flexible Spending Accounts Benefits Communication HR Audit Instructions for HR Audit: Case Study Teams of three students You will be provided with some background information for the company you picked. An HRM audit is a formal review of the outcomes of HRM functions. To conduct the audit, the HR department identified key functions and the key measures of business performance and customer satisfaction that would indicate each function is succeeding. HR Audit Business and Customer Satisfaction Indicators: Staffing Average days to fill open requisitions Ratio of acceptances to offers made Ratio of minority/women applicants to representation in local labor market Average years of experience/education per job family Anticipation of personnel needs Timeliness of referring qualified workers to line supervisors Treatment of applicants Skill in handling terminations Adaptability to changing labor market HR Audit Compensation Per capita average merit increases Percentage of overtime hours to straight time Ratio of average salary offers to average salary in community Fairness of existing job evaluation system Competitiveness in local labor market Relationship between pay and performance Employee satisfaction with pay Benefits Average unemployment compensation payment Average workers’ compensation payment Benefit cost per payroll dollar Percentage of sick leave to total pay Promptness in handling claims Fairness and consistency in the application of benefit policies Communication of benefits to HR Audit Training Percentage of employees participating in training programs per job family Percentage of employees receiving tuition refunds Training dollars per employee Extent to which training programs meet the needs of employees and the company Communication to employees about available training opportunities Quality of introduction/orientation programs Employee Appraisal and Development Distribution of performance appraisal ratings Appropriate psychometric properties of appraisal forms Assistance in identifying management potential Organizational development opportunities provided by HRM HR Audit Overall Effectiveness Ratio of HR staff to employee population Turnover rate Absenteeism rate Ratio of per capital revenue to per capita cost Net income per employee Unionization Accuracy and clarity of information provided to managers and employees Competence and expertise of staff Working relationship between organizational units and the HR department answer the questions that are provided with the background information in detail. HR Audit You need to conduct some research to gather additional information about the company. Since you do not have access to all the information required for an in-depth HR audit, you are asked to provide an analysis of the HR function in “your” company by also using the following questions: To what extent does “your” company emphasize the importance and value of the human resources of the company through the philosophy and beliefs of top management? To what extent does your company invest time and money in improving human resource procedures and practices? HR Audit To what extent does your company develop, monitor and evaluate human resource practices? To what extent does your company emphasize ensure uniform application of all human resource policies throughout the company? To what extent does your company include the HR director/function in the development of strategic plans for the company? Are the HR practices consistent with the company’s mission? Is this company considered an employer of choice (check “The Most Admired Companies” annual publication by Fortune Magazine)? Is this company known for progressive and novel HR practices? Describe and explain. HR Audit Suggested (not required) structure for your report: Company Introduction Industry and products – Market Share – Current Status Revenue, Number of employees Level of internationalization History – Positives and Setbacks Business Strategy - Mission HR Practices and their Success Strategic Role of HR Code of Ethics Consistency between Strategy and HR Practices Unique HR Aspects The number one “thing” you should know about this company? Why we would “love” (or not) to work for this company. Recommendations HR Audit Appendix: Answers to the questions that were provided with the background information. The report should not be between 10 and 15 pages long. It is due the last day of class. You have 20 minutes for your presentation and 10 minutes for questions and answers. Each team member must participate in the presentation. You presentation may, but does not have to, follow the structure of your report. Company List: BP Amoco, Motorola GM Johnson & Johnson American Airlines Southwest Airlines Ford Arthur Anderson Course Summary Warren Bennis List 10 things that you have learned in this course. How will you be able to apply these “things”? How will these “things” help you in your future career?