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Strategic Staffing Third Edition

Chapter 11

Choosing and

Hiring Candidates

Learning Objectives

After studying this chapter, you should be able to:

• Describe different ways of combining candidates’ scores

on different assessment methods to calculate an overall

score.

• Describe three different ways of making a final choice of

whom to hire.

• Discuss the factors that influence the content of a

company’s job offer.

• Describe the four different job offer strategies.

• Describe different types of fairness and explain why

candidates’ perceptions of fairness are important to

staffing.

Combining Assessment Scores

• When using more than one assessment method, as is

usually the case because the validity of the candidate’s

assessment is more valid when using multiple predictors,

a candidate’s scores must be meaningfully combined to

calculate an overall score that can be compared across

candidates or to a minimum hiring standard.

• There are two ways of combining assessment scores:

multiple hurdles and compensatory approaches.

Multiple Hurdles

• Multiple hurdles: candidates must receive a passing

score on an assessment before being allowed to continue

in the selection process

• Costly and take more time due to the need for candidates

to make repeated visits for the different assessments

• Used when the cost of poor performance on that

characteristic is high

– For example, when safety is at risk

Compensatory Approaches

Compensatory approach: high scores on some

assessments can compensate for low scores on other

assessments.

This approach is less useful for jobs in which specific

talents must exist at a minimum level.

Executing the Compensatory

Approach

• Unit weighting: giving multiple assessments equal weight

in computing an overall score

• Rational weighting: experts assign a different subjective

weight to each assessment score

• Statistical weighting: using a statistical technique, such

as multiple regression, to assign a different weight to each

assessment score

• Multiple regression: the most scientific approach to

determining how to weight each assessment in computing

a candidate’s overall score

Unit-Weighted Approach Table 11-1 Standardizing and Combining Raw Scores Using the Unit

Weighted Approach

blank Ying’s Raw Score

Ying’s

Standardized

Score

Tony’s Raw Score

Tony’s

Standardized

Score

Structured

Interview

89 1.5 60 .4

Knowledge Test 25 1.1 35 1.7

Assessment

Center

6 .9 7 1.1

Unit Weighted

Overall Score

blank 3.5 blank 3.2

Statistical Weighting Approach (1 of 2) The output of a multiple regression includes a formula like:

• Overall score = c + (b1 * a1) + (b2 * a2) + (b3 * a3)…

In this formula, c is a constant, the b’s are the statistical weights

applied to each assessment method to maximize the validity of the

group of assessment methods, and the a’s are a candidate’s scores on

each of the assessment methods. Any number of assessment methods

can be used.

For example, if the regression equation looked like this:

• Overall score = 24 + (.20 * Cognitive Ability) + (.25 * Interview) + (.15 *

Personality)

And the candidate’s cognitive ability score was 70, interview score was

75, and personality score was 50, then the candidate’s overall score

would be 64.25:

• 64.25 = 24 + (.2*70) + (.25*75) + (.15*50)

Statistical Weighting Approach (2 of 2) • To be most accurate, the statistical approach requires a

sample of several hundred or more hires, a low inter-

correlation among assessment methods, and a relatively small

number of assessment methods.

• Because the weights can differ when derived from different

groups of people, it is best to check the stability of the multiple

regression equation in different groups to assess its actual

effectiveness.

• If estimating the regression equation on a large sample size is

not possible, unit weighting or even rational weighting may be

a better choice.

• Validity can sometimes be enhanced by combining the

multiple regression approach with global expert judgment.

Combining Multiple Hurdles and

Compensatory Approaches

Often, some job requirements are essential to job

performance but others can compensate for each other.

• A data entry hire may need to type a certain number of words

per minute with a minimum number of errors, which would be a

minimum hurdle, but cognitive ability and personality may be

compensatory factors.

• A typing test can be used at the beginning of the assessment

process as a hurdle to weed out candidates who do not meet

the minimum typing requirements, then a compensatory

approach balancing cognitive ability and personality used at the

end. Scores on cognitive ability and personality would be

weighted and combined in a compensatory manner and the

highest scoring candidates offered jobs.

Final Choice (1 of 2) Cut score: a minimum assessment score that must be met or exceeded to advance to the next assessment phase or to be eligible to receive a job offer.

Rank ordering: ranking candidates from highest to lowest scoring.

Banding: Everyone who scores within a certain range of scores is considered to have performed equivalently and assigned the same grade.

• Hiring within the band is done randomly or based on other factors (EEO

or affirmative action goals, etc.).

• Banding allows for the consideration of other factors in making a final

choice, including whether an internal candidate is at risk of leaving the

company if passed up for a promotion.

• Band widths are generally calculated on the basis of the standard error

of measurement.

Banding

Table 11-2 Banding Candidates

Candidate Overall Score Band

Amy 87 1

Yu 85 1

Lee 79 2

Pedro 78 2

Amila 78 2

Bill 65 3

Tim 63 3

Lin 61 3

Final Choice (2 of 2) • When using cut scores or rank ordering, an additional decision

needs to be made about whether to hire from the top of the list

down, or to create a pool of finalists from which to make a final

choice.

• This pool of finalists can then be rank ordered based on global

or specific assessments, selected from randomly, or banded.

There is no one best method of choosing the candidates to

whom to extend job offers.

• Whenever possible, the ability of the assessment scores to

predict job success should be carefully evaluated, and cutoff

scores should be set high enough to ensure that new hires are

likely to meet or exceed minimum standards of success.

Legal Issues The Fair Labor Standards Act: covers working hours and the

payment of overtime or compensatory time off to nonexempt

employees.

• If an applicant is not hired because the applicant has previously

exercised his or her rights under the FLSA, a court may conclude that

the applicant’s rights have been violated.

The Family and Medical Leave Act (FMLA): entitles qualified

applicants up to 12 weeks of unpaid leave for certain reasons.

• If an applicant is not hired because he or she had previously

exercised his or her rights under the FMLA, a court may conclude

that the applicant’s rights have been violated. For example, a federal

appellate court held that an employer who failed to hire an applicant

because she “took a lot of FMLA” violated this statute.

Uniform Guidelines on Employee

Selection Procedures The UGESP require the elimination of adverse impact or its justification

through validation studies.

The Guidelines generally state that cut scores should be set no higher

than necessary to achieve acceptable proficiency among those hired.

• The determination of this minimum proficiency level is up to the firm.

• Even if an assessment method or battery is highly valid, it is not advisable to

set a cut score that generates adverse impact and that screens out minority

applicants whose scores are consistent with normal expectations of

acceptable proficiency.

• The UGESP also state that “the way in which normal expectations of

proficiency within the workforce were determined and the way in which the

cutoff score was determined” should be described.

To deal with adverse impact problems, the UGESP also discuss the use

of “alternative procedures” that cause less adverse impact but that have

similar validity to the problematic procedure.

Preference for Diversity During Final

Choice

Affirmative action and diversity programs need to be

carefully implemented to avoid the potential for legal trouble.

Pursuing diverse hires should not begin during the

assessment stage of the hiring process.

• If qualified diverse candidates do not become part of the

applicant pool, no selection system can identify them.

• If sourcing and recruiting activities identify and attract qualified

diverse applicants, then applying a valid assessment system

that has little to no adverse impact should generate quality,

diverse hires.

• Successfully attracting qualified diverse applicants eliminates

the need to consider any protected characteristic as a “plus

factor” in the final candidate choice.

Job Offer Strategies (1 of 2)

Particularly for firms with a talent philosophy of viewing

employees as investors rather than assets, the job offer

should maximize the employee value proposition offered to

the finalist.

Before extending a job offer, or deciding on the content of the

job offer, it is always a good idea to verify the truthfulness of

any statements made by the applicant that were relied on in

assessing the candidate or deciding on the offer’s contents

• Grade point average, prior work experience, prior salary, etc.

It is also a good idea to identify a backup hire in case your

first choice does not take the job.

Job Offer Strategies (2 of 2)

Compensation Decisions

• Low job offer: below-market rewards package

• Competitive job offer: total rewards package is

competitive with the market

• High job offer: total rewards package is above the market

• Maximum job offer: the company’s best and final offer

Employment Contract • Implicit employment contract: an understanding that is not part of a written or

verbal contract.

• Because binding contracts for employment or for future compensation can be

created verbally, great care should be taken during discussions with

prospective new hires.

• To be legally binding and enforceable, any contract must consist of an offer

outlining the terms and conditions of employment (and possibly a deadline for

accepting the contract) that is accepted on the terms offered. Something of

value (consideration), usually promises of pay in exchange for promises for

labor, must also be exchanged.

• An agent authorized by the receiver can negotiate on the finalist’s behalf, and

agents authorized by the organization such as executive recruiters and search

consultants can negotiate on behalf of the company.

• Offer letter: written letter describing in clear and precise terms exactly what the

compensation structure and terms of employment will be.

Common Employment Contract

Content (1 of 2) Table 11-4 Employment Contract Content

Although the content of employment contracts varies, depending on the industry and the

particular employee, here are some examples of topics frequently covered by employment

contracts:

• The job’s title, description of position, and job duties. The contract should outline the

position and its duties, or a reference should be made to a specific job description also

provided to the finalist. An employer also should include language allowing the company to

assign additional duties, as appropriate, to the new hire.

• The start date. The start date is typically at least two weeks from the offer acceptance date if

the finalist needs to resign from his or her current job.

• The job’s compensation, benefits, and incentive pay. If any.

• Any hiring inducements. Sign-on bonuses, relocation expenses, and so forth.

• The offer’s acceptance procedures. The firm needs to spell out that by signing the contract,

the finalist accepts the employment terms and conditions offered by the employer, subject to

the conditions listed in the agreement. The firm should also insist that the acceptance of the job

offer be in writing. An acceptance deadline should be included to allow the company to move

on to the next finalist if the offer has not been accepted by a certain date.

• The duration of the contract. If it’s for a limited period of time.

Common Employment Contract

Content (2 of 2) Table 11-4 Employment Contract Content

• Hours of work. The contract should outline the job’s work hours via a statement

like the following: “The regular workday shall consist of eight (8) hours of work

between 9 a.m. and 5 p.m.” or be worded to provide maximum flexibility: “Hours of

work will vary and be scheduled as needed.”

• Disclaimers. A disclaimer explicitly limits an employee right, such as his or her right

to employment, and reserves it for the employer. One of the most common

disclaimers is a provision that the employment is at will if it is not for a specific time

period. A statement to the effect that by accepting the offer, the employee agrees

that the organization has not made any promises other than those in the written

offer is also a disclaimer.

• The rights to the employee’s inventions and work products.

• Termination criteria. If the contract is not on an at-will basis, it should spell out any

specific grounds for termination.

• An explanation of how disputes will be handled. One way to avoid the expense

of going to court is to agree to arbitrate any future disputes with the employee.

Arbitration is also generally much faster than formal court proceedings.

Employment Contracts

• Statements on a job application blank (e.g., a statement

that providing false information is grounds for termination),

statements in employee handbooks, and statements in

other documents may become interpreted as enforceable

contracts.

• Often focus more on termination issues than on

employment.

Additional Agreements

• First rights to their inventions and patents

• Nondisclosure agreements

• Incompete clauses

• Non-solicitation agreements

• It is a good idea to consult legal counsel before preparing

any contract forms or statements on application forms

• Because states’ laws differ, employment law counsel

should also be consulted to determine whether your state’s

law enforces non-compete covenants and, if so, under

what circumstances

Presenting a Job Offer (1 of 2)

• In writing

• Verbally

• Showing your company as a unique or exciting place to

work can help close the deal

• Emphasizing the selling points of the job itself and the

career development opportunities that exist, as well as

selling the company’s image and brand, can increase the

appeal of the opportunity to the candidate

– The job rewards analysis should help identify some of a

job’s most attractive features

Presenting a Job Offer (2 of 2)

• Should reinforce the company image and the positive

impression formed by the candidate during the hiring

process

• While the candidate is considering the offer, it is a good

idea to stay in contact with him or her to reinforce your

enthusiasm

Negotiable Job Offer Elements Table 11-5 Negotiable Job Offer Elements

Salary

Sign-on bonuses and other one-time inducements

Nonsalary compensation: performance bonuses, profit sharing, deferred

compensation, severance package, and stock options

Relocation expenses: house-hunting expenses and closing costs, temporary

living allowances, travel expenses, and spousal reemployment expenses

Benefits: vacation, sick, and personal days (number, amount paid, and timing),

conference attendance, tuition reimbursement, professional memberships,

product discounts, and short-term loans

Job-specific elements: the timing of the employee’s first performance review

and potential raise; the job’s title, roles, and duties; the location of the work

(e.g., whether telecommuting is allowed), work hours and if they are flexible,

and the start date

Salary Negotiating Zone

Job Offer Negotiation Tips • Do not look at a negotiation as an either/or proposition

• Identify what you can and cannot part with and be realistic

• Try to identify and use sources of leverage

• Suppress your emotions

• Know your BATNA

• Take time to evaluate the offer

• Practice your negotiation skills

• Document and be prepared to discuss your skills and

accomplishments

• Be appreciative and respectful; remember that employment

is an ongoing relationship

Closing the Deal (1 of 3) For job offer acceptances:

• Ensure that the finalist followed the proper procedures, accepted

the job offer as written, and responded before the deadline.

• Congratulate the new hire and express your enthusiasm about

having him or her onboard.

– It can also be helpful to ask what persuaded the person to say yes,

and what he or she thought of each company contact and the hiring

process.

• To begin the new hire’s transition into the company, stay in contact

with the new hire and encourage his or her supervisor and

coworkers to do the same.

• Once a job offer has been accepted, the recruiter’s role is to begin

building the new hire’s commitment to the company and enhancing

his or her ability to succeed on the job.

Closing the Deal (2 of 3) When the company rejects a candidate:

• Do so respectfully.

• Distributive fairness will be perceived as low, and to reduce negative

spillover effects, efforts should be made to enhance the procedural

and interactional fairness perceptions of rejected applicants.

• Negative reactions of rejected internal candidates may be reduced

by explaining why they were not chosen, and what they can do to

be more competitive for the position in the future.

– Development plans can be created to help the rejected employees

enhance their experience and qualifications.

Closing the Deal (3 of 3) When a finalist rejects a job offer:

• Try to find out why and whether an enhanced offer might be

acceptable if the firm is willing to negotiate.

• Promptly and respectfully acknowledge the rejection.

• Be sure to keep appropriate records of all applicants for EEO/AA

computations, such as applicant flow.

• If a rejected applicant is qualified for a different position or if they

might be hirable in the future for the job to which he or she applied,

requesting permission to retain the applicant’s information for a

period of time can help to build a talent pipeline and facilitate the

future sourcing and recruiting of pre-qualified applicants.

Fairness Perceptions Distributive fairness: the perceived fairness of the outcomes

received

• Because most applicants don’t get a job offer, distributive fairness

perceptions are often low

Procedural fairness: the perceived fairness of the policies and

procedures used to determine the hiring outcome

Interactional fairness: perceptions of the degree of respect and

the quality of the interpersonal treatment received

Attending to procedural and interactional fairness perceptions can

increase finalists’ willingness to accept job offers and can help

reduce the negative spillover effects among those applicants

turned down for the job who perceive low distributive fairness

Reneging Reneging is backing out of a contract after it is accepted.

• Job seekers should never accept an offer unless willing to commit

• Employers should never pressure candidates to renege on other

employers

If an employer must renege on a job offer or new hire, perhaps

because business conditions have changed, the individual often

receives compensation for breaking the contract

• Honesty and respect can reduce subsequent feelings of unfairness

and inequity and maintain the individuals’ willingness to work for the

firm in the future

Discussion Questions (1 of 2)

1. Which approach to combining candidates’ assessment

scores would you favor for choosing candidates? Why?

2. Is it ethical for some new hires to receive different levels

of pay and benefits than other new hires? Why or why

not?

3. If you received a job offer via e-mail, with no phone or

personal contact, how would you feel? Would it influence

your decision to accept the offer?

Discussion Questions (2 of 2)

4. If you received a very appealing job offer one week

after accepting a different job offer with another

company, what would you do?

5. Think about different job offers you have received.

What made some of them better than others?

Develop Your Skills Exercise

This chapter’s “Develop Your Skills” feature provided

several tips on negotiating a job offer. In this exercise, you

and a partner will use these tips to role-play a job offer

negotiation. When you have finished, switch roles and

negotiating partners so that you each have a chance to be

the company representative and a chance to be the finalist

with someone else.

Your instructor will provide you each with more information

and goals for your role.

Opening Vignette Exercise In this chapter’s opening vignette you learned how MarineMax

tries to tailor its job offers to specific candidates. Working in a

group of 3-5 students, reread the vignette and be prepared to

share with the class your answers to the following questions:

• Do you think that it is ethical for MarineMax to give different new

hires for the same job different amounts of pay and benefits?

• Should MarineMax use a low, competitive, or high job offer? Why?

Should the company present a maximum job offer or leave room to

negotiate? Why?

• What can MarineMax do to increase the likelihood that the top sales

candidates it recruits will accept its job offers?

Chern’s Case Assignment (1 of 2) a) Develop a rational way of combining the scores on the

assessment methods you recommended. Recommend

either a multiple hurdles, compensatory, or combined

approach and explain.

b) Describe the weights for each assessment method when

calculating the overall score.

c) Using your interview score results, candidate résumés,

and scores on the assessment methods you included in

your assessment plan, identify which two candidates

should receive an offer.

d) Submit this information along with your rationale.

Chern’s Case Assignment (2 of 2) e) Explain what additional information you would like to have

had before making a hiring decision.

f) Write a job offer letter to the top candidate of your two

chosen hires (you only need to write one letter).

g) Receive feedback from your instructor on the outcomes for

the candidates you chose.

h) Calculate the ROI or net return of your staffing investment

for the two people you selected. Interpret the ROI or net

return.

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