Unit 09 Slide - St. Cloud State University

© 2014 Cengage Learning
U.S. equal opportunity laws
Title VII of the Civil Rights Act of 1964
Age Discrimination in Employment Act of 1967
Equal Pay Act of 1963
Pregnancy Discrimination Act of 1978
Americans with Disabilities Act of 1990
Civil Rights Act of 1991
Family and Medical Leave Act of 1993
Basic elements of Title VII
Title VII of the Civil Rights Act of 1964 as amended in 1991 prohibits
discrimination based on color, race, national origin, age, religion, sex, disability,
and pregnancy.
Executive order 11246 and affirmative action as required by the order
Federal enforcement agencies: EEOC and OFCCP
Illegal discriminations as defined by the Uniform Guidelines of EEOC:
– Adverse impact, a form of unintentional discrimination that harmed or
disadvantaged at substantially lower rates than others.
– Four-fifths rule to determine to determine if adverse impact has occurred.
– Disparate treatment, a form of intentional discrimination which occurs when
people, despite being qualified, are intentionally not given the same
opportunities as others.
EEO court procedures
• A plaintiff presents prima-facie evidence for illegal
discrimination when filing their complaints.
• The defendant and Burden of proof:
– BFOQ : employee qualifications “reasonably necessary
to the normal operation of that particular business.”
– Objective evidence for job-relatedness
Prima facie(pry-mah fay-shah)
• adj., Latin for "at first look," or "on its face," referring to a lawsuit or
criminal prosecution in which the evidence before trial is sufficient
to prove the case unless there is substantial contradictory evidence
presented at trial. A prima facie case presented to a Grand Jury by
the prosecution will result in an indictment.
• For example, in a charge of bad check writing, evidence of a half
dozen checks written on a non-existent bank account makes it a
prima facie case. However, proof that the bank had misprinted the
account number on the checks might disprove the prosecution's
apparent "open and shut" case.
Employer Brand
• Recruiting consists of a set of activities that improves the number
and quality of people who apply for employment and the
pro0bability that qualified compatible applicants will accept
employment offers.
• An employer brand is the package of functional, economic, and
psychological benefits provided by employment and identified with
the company as an employer – namely, a company’s reputation as an
employer which creates a clarity about what the company is about
and helps potential recruits differentiate the company from a large
array of potential employers.
Supporting an employer brand
• There are four main activities that support an
employer brand:
– Identify and develop positive differentiating features.
– Raise the company’s public profile.
– Use consistent messages in recruiting and marketing.
– Earn third party recognition.
• What is the employer brand of:
– Apple? Google? JP Morgan? Lockheed Martin?
– Wal-Mart? Disney? Enterprise Rent-A-Car?
• Realistic job preview and Employee turnover
What can companies do to weed out workers
who are not qualified for the job?
• One strategy suggested was to offer a high wage, thereby
generating a large pool of applicants, and select only those
best suited for the job.
• Simply offering a high wage without any stipulations will
encourage too many low-quality applicants to apply for the
job, and the personnel office will be flooded a large number
of applicants, only a small proportion of whom are suited to
the firm’s needs.
• An even worse consequence is that some of the undesirable
workers will slip through the screening process and actually
get hired, and during the time they work for the firm, they can
cause major problems, disrupting output and costing the firm
wages not justified by their productivity.
Adverse selection
• A number of approaches can help to mitigate the effects of adverse
selection that results when the wrong kinds of workers are
attracted to the firm because of a particular policy the firm uses.
• There are two approaches that can help to mitigate the problems of
adverse selection:
– Contingent compensation schemes
– Probationary periods
• Probationary periods and properly designed pay schemes can
generate the appropriate pool of applicants for a firm.
Options for lawn mower blade-sharpeners
Hourly output of blades
Hourly wage – Other option
• A company paying blade-sharpeners $3.35 per sharpened
blade can effectively weed out unskilled workers and attract
only skilled workers.
• Under this piece rate plan:
Skilled workers earn:
$20.10 = $3.35 x 6 pieces > $20.00
Unskilled workers earn: $13.40 = $3.35 x 4 pieces > $16.00
But you should understand:
• Key to this contingent pay contract is that workers have an
accurate assessment of their own output before they start
the job. If not, contingent pay schemes do not weed out
undesirable workers.
• Both skilled and unskilled workers will apply if they believe
they can produce 6 pieces per hour.
• Conversely, any piece rate low enough (e.g., less than $16) to
keep out unskilled workers must necessarily keep out skilled
Selection Interview: Validity
• The validity of selection procedure refers to how well a
selection method predicts an applicant’s suitability as
an employee.
• Interviewing job candidates is one way to collect
information that will help companies select which job
applicants they want to join the company.
• Interviews are frequently used in the selection
process, but the validity of interviews varies widely.
Improve the validity of
selection Interviews
Structured interview – a method that asks applicants to recall
specific incidents in the past and describe how they handled the
situations. A general question is asked, followed by several probe
questions asking for more details or a more thorough explanation.
Multiple interviewers – bringing more than one perspective to a
complex problem can improve the quality of the final decision. The
individual biases of interviewers tend to cancel each other. Studies
suggest that using multiple interviewers using an unstructured
interview process provides as valid a result as a patterned behavior
description interview.
Training – train managers to be aware of interviewer biases. While
this is only minimally useful, it is better than nothing
Costs of selection error
• There are two types of error that may occur in selection:
– Type 1 error – when a most suitable applicant is rejected.
– Type 2 error – when an unqualified applicant is accepted.
• The costs of type 1 error
• The costs of type 2 error
• Cost-effective selection standards
How should managers compensate
their employees?
Traditional wage and salary
Pay for performance
Piece rate and commissions
Pay for team performance
Gain sharing
Profit sharing
Turnover and Layoffs
• Employee separation incurs significant costs when it results in a loss of
high-performance employees. Why?
– New workers must be found.
– New workers must be trained for firm-specific skills.
– New workers must be integrated into the production process.
• Employee turnover can be either functional or dysfunctional.
• Voluntary turnover (employee quit) and layoffs are two examples of
dysfunctional separation.
• Just-in-cause dismissal is an example of functional turnover.
Keeping high-performance employees
• Empirical studies indicate that when pay is strongly tied to
performance via sales commissions and performance-based
bonuses, poor performers are much more likely to leave.
• Properly designed pension plans can also reduce voluntary
• Linking managers’ pay to turnover (layoffs and quit) is
recognition of people as a driver of business success and also
reflects a recognition that turnover is costly.
Wage premiums
• Use of a wage premium helps companies retain highperformance employees.
• Properly designed wage premiums can also lead to high
performance, especially when combined with the threat of
termination for poor performance.
• High wage policy thus can be one of the efficiency wage
Profit sharing and Layoff practices
• Layoffs or pay cuts?
• laying off employees and especially those with critical or
irreplaceable skills, knowledge, and expertise is in general
highly costly.
• Profit-sharing can help to avoid costly layoffs.

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