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
The External Environment

Social Technological Political

Economy
Environment Environment Environment

The Internal Environment

People
Business
  Effectiveness
Strategy
Processes  Structure

 
Culture
 Strategic Planning
Scanning the environment: SWOT
Vision
Mission
Goals
Objectives
Strategies and Tactics
Performance Indicators
The International Organization
The External Environment
Culture

Multiple Multiple Social Technological Political

Economy Environment Environment Environment

The Internal Environment

People

Business  
Effectiveness
Strategy
Processes  Structure

 

Culture
 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
The External Environment

Social Legal
Economy Labor Market
Environment Environment

Match
HR Outcomes:
HR Activities: Job Satisfaction
Individual
Recruitment, Org.
*KSA’s
Selection, commitment
*Needs
Training, Attraction
Compensation, Retention
Job Attendance
Labor relations
*KSA Requirements
Performance
*Rewards
 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/Capital-
Information/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: 62 95 66
ST/LT: 29 80 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 health-
care 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  Plaintiff

Prima Facie Evidence

1. Disparate Treatment 1. Job-based/legitimate 1. Defendant
explanation pretext; true
McDonnell Rule: 4 conditions reason was
rejection for
prejudice
2. Adverse Impact 2. Business Necessity, 2. Other
method
80% or 4/5 Rule BFOQ, Validation
 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

nr12
rttc 
1  (n - 1)r12
Where :
rttc  the corrected split - half reliability
coefficient for the total selection measure
n  number of times the test was increased in length
r12  the correlation 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 - rxx
Where :
meas  the standard error of measurement for measure X
x  the standard deviation of obtained score on measure X
rxx  the reliability 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?