Seventh Edition

APPLIED PSYCHOLOGY IN HUMANRESOURCE MANAGEMENT

Wayne F. CascioThe Business School

University of Colorado Denver

Herman AguinisKelley School of Business

Indiana University

Boston Columbus Indianapolis New York San Francisco Upper Saddle RiverAmsterdam Cape Town Dubai London Madrid Milan Munich Paris Montreal Toronto

Delhi Mexico City Sao Paulo Sydney Hong Kong Seoul Singapore Taipei Tokyo

CONTENTS

Preface xvii

Chapter 1 Organizations, Work, and Applied Psychology 1At a Glance 1

The Pervasiveness of Organizations 1

Differences in Jobs 2

Differences in Performance 2

A Utopian Ideal 3

Point of View 3

Personnel Psychology in Perspective 3

The Changing Nature of Product and Service Markets 5

Effects of Technology on Organizations and People 6

Changes in the Structure and Design of Organizations 6

The Changing Role of the Manager 7

The Empowered Worker—No Passing Fad 8

Implications for Organizations and Their People 9 /

Plan of the Book 10 -• Evidence-Based Implications for Practice 12

Discussion Questions 12

Chapter 2 The Law and Human Resource Management 13At a Glance 13

The Legal System 14

Unfair Discrimination: What Is It? 16

Legal Framework for Civil Rights Requirements 17

The U.S. Constitution—Thirteenth and Fourteenth Amendments 18

The Civil Rights Acts of 1866 and 1871 18

Equal Pay for Equal Work Regardless of Sex 18

Equal Pay Act of 1963 18

Equal Pay for Jobs of Comparable Worth 19

Equal Employment Opportunity 19

Title VII of the Civil Rights Act of 1964 19Nondiscrimination on the Basis of Race,

Color, Religion, Sex, or National Origin 20

Apprenticeship Programs, Retaliation, and EmploymentAdvertising 20

Suspension of Government Contracts and Back-Pay Awards 21

Bona Fide Occupational Qualifications 21

Seniority Systems 21

Preemployment Inquiries 21

Testing 21

iii

iv Contents

Preferential Treatment 21

Veterans Preference Rights 21

National Security 22

Age Discrimination in Employment Act of 1967 22

The Immigration Reform and Control Act of 1986 23

The Americans with Disabilities Act (ADA) of 1990 23

Enforcement 24

The Civil Rights Act of 1991 25

Monetary Damages and Jury Trials 25

Adverse Impact (Unintentional Discrimination) Cases 25

Protection in Foreign Countries 25

Racial Harassment 26

Challenges to Consent Decrees 26

Mixed-Motive Cases 26

Seniority Systems 26

Race-Norming and Affirmative Action 26

Extension to U.S. Senate and Appointed Officials 26

The Family and Medical Leave Act of 1993 26

Executive Orders 11246, 11375, and 11478 27

Enforcement of Executive Orders 27

The Rehabilitation Act of 1973 28

The Vietnam Era Veterans Readjustment Act of 1974 28

Uniformed Services Employment and ReemploymentRights Act of 1994 28

Enforcement of the Laws—Regulatory Agencies 28

State Fair Employment-Practices Commissions 28

Equal Employment Opportunity Commission 28

The Complaint Process 29

Office of Federal Contract CompliancePrograms 29

Goals and Timetables 30

Employment Case Law—General Principles 30

Testing 30

Personal History 32

Sex Discrimination 32

Preventive Actions by Employers 34

Age Discrimination 34

"English Only" Rules—National Origin Discrimination? 35Seniority 35Preferential Selection 36• Evidence-Based Implications for Practice 37

Discussion Questions 38

Contents

Chapter 3 People, Decisions, and the Systems Approach 39At a Glance 39

Utility Theory—A Way of Thinking 39

Organizations as Systems 41

A Systems View of the Employment Process 43

Job Analysis and Job Evaluation 43

Workforce Planning 45

Recruitment 45

Initial Screening 46

Selection 46

Training and Development 47

Performance Management 48

Organizational Exit 48• Evidence-Based Implications for Practice 49

Discussion Questions 50

Chapter 4 Criteria: Concepts, Measurement, and Evaluation 51At a Glance 51

Definition 52

Job Performance as a Criterion 54

Dimensionality of Criteria 54

Static Dimensionality 54

Dynamic or Temporal Dimensionality 56

Individual Dimensionality 58

Challenges in Criterion Development 59

Challenge #1: Job Performance (Un)Reliability 59

Challenge #2: Job Performance Observation 60

Challenge #3: Dimensionality of Job Performance 61

Performance and Situational Characteristics 61

Environmental and Organizational Characteristics 62

Environmental Safety 62

Lifespace Variables 62

Job and Location 62

Extraindividual Differences and Sales Performance 63

Leadership 63

Steps in Criterion Development 63

Evaluating Criteria 63

Relevance 64

Sensitivity or Discriminability 64

Practicality 64

Criterion Deficiency 65

Criterion Contamination 65

Bias Due to Knowledge of Predictor Information 66

vi Contents

Bias Due to Group Membership 66

Bias in Ratings 66

Criterion Equivalence 67

Composite Criterion Versus Multiple Criteria 67

Composite Criterion 67

Multiple Criteria 68

Differing Assumptions 68

Resolving the Dilemma 69

Research Design and Criterion Theory 69• Evidence-Based Implications for Practice 71

Discussion Questions 72

Chapter 5 Performance Management 73At a Glance 73

Purposes Served 74

Realities of Performance Management Systems 75Barriers to Implementing Effective Performance

Management Systems 75

Organizational Barriers 75

Political Barriers 76

Interpersonal Barriers 76

Fundamental Requirements of Successful PerformanceManagement Systems 76

Behavioral Basis for Performance Appraisal 77

Who Shall Rate? 79

Immediate Supervisor 79

Peers 79

Subordinates 80

Self 81

Clients Served 82

Appraising Performance: Individual Versus Group Tasks 82

Agreement and Equivalence of Ratings Across Sources 83

Judgmental Biases in Rating 85

Leniency and Severity 85

Central Tendency 86

Halo 86

Types of Performance Measures 87

Objective Measures 87

Subjective Measures 87

Rating Systems: Relative and Absolute 88

Relative Rating Systems (Employee Comparisons) 88

Absolute Rating Systems 89

Summary Comments on Rating Formats and Rating Process 95

Contents vii

Factors Affecting Subjective Appraisals 96

Evaluating the Performance of Teams 99

Rater Training 101

The Social and Interpersonal Context of PerformanceManagement Systems 102

Performance Feedback: Appraisal and Goal-Setting Interviews 104

Communicate Frequently 105

Get Training in Appraisal 105

Judge Your Own Performance First 105

Encourage Subordinate Preparation 106

Use "Priming" Information 106

Warm Up and Encourage Participation 106

Judge Performance, Not Personality or Self-Concept 106

Be Specific 106

Be an Active Listener 107

Avoid Destructive Criticism and Threatsto the Employee's Ego 107

Set Mutually Agreeable and Formal Goals 107

Continue to Communicate and Assess ProgressToward Goals Regularly 108

Make Organizational Rewards Contingent on Performance 108• Evidence-Based Implications for Practice 108

Discussion Questions 109

Chapter 6 Measuring and Interpreting Individual Differences 110At a Glance 110

What Is Measurement? 111

Scales of Measurement 111

Nominal Scales 112

Ordinal Scales 112

Interval Scales 113

Ratio Scales 114

Scales Used in Psychological Measurement 114Consideration of Social Utility in the Evaluation

of Psychological Measurement 115

Selecting and Creating the Right Measure 115

Steps for Selecting and Creating Tests 116

Selecting an Appropriate Test: Test-Classification Methods 118

Further Considerations in Selecting a Test 120

Reliability as Consistency 121

Estimation of Reliability 121

Test-Retest 122

Parallel (or Alternate) Forms 123

viii Contents

Internal Consistency 124

Stability and Equivalence 127

Interrater Reliability 128

Summary 129

Interpretation of Reliability 130

Range of Individual Differences 130

Difficulty of the Measurement Procedure 131

Size and Representativeness of Sample 131

Standard Error of Measurement 131

Scale Coarseness 132

Generalizability Theory 134

Interpreting the Results of Measurement Procedures 135• Evidence-Based Implications for Practice 138

Discussion Questions 138

Chapter 7 Validation and Use of Individual-DifferencesMeasures 139At a Glance 139

Relationship between Reliability and Validity 139

Evidence of Validity 141

Content-Related Evidence 142

Criterion-Related Evidence 145

Predictive Studies 146

Concurrent Studies 148

Requirements of Criterion Measures in Predictiveand Concurrent Studies 149

Factors Affecting the Size of Obtained ValidityCoefficients 149

Range Enhancement 149

Range Restriction 150

Position in the Employment Process 153

Form of the Predictor-Criterion Relationship 153

Construct-Related Evidence 153

Illustration 156

Cross-Validation 157

Gathering Validity Evidence When Local ValidationIs Not Feasible 158

Synthetic Validity 159

Test Transportability 159

Validity Generalization 160

Empirical Bayes Analysis 165

Application of Alternative Validation Strategies:Illustration 165

• Evidence-Based Implications for Practice 166Discussion Questions 166

Contents ix

Chapter 8 Fairness in Employment Decisions 167At a Glance 167

Assessing Differential Validity 168

Differential Validity and Adverse Impact 169

Differential Validity: The Evidence 173Assessing Differential Prediction and Moderator

Variables 174

Differential Prediction: The Evidence 176

Problems in Testing for Differential Prediction 177

Suggestions for Improving the Accuracy of Slope-basedDifferential Prediction Assessment 179

Further Considerations Regarding Adverse Impact, DifferentialValidity, and Differential Prediction 180

Minimizing Adverse Impact Through Test-ScoreBanding 184

Fairness and the Interpersonal Contextof Employment Testing 189

Fair Employment and Public Policy 190• Evidence-Based Implications for Practice 191

Discussion Questions 192

Chapter 9 Analyzing Jobs and Work 193At a Glance 193

Terminology 195

Aligning Method with Purpose 196

Choices 196'

Defining the Job 197

Job Specifications 197

Establishing Minimum Qualifications 199

Reliability and Validity of Job-Analysis Information 200

Obtaining Job Information 201

Direct Observation and Job Performance 202

Interview 205

SME Panels 205

Questionnaires 206

The Position Analysis Questionnaire 206

Fleishman Job Analysis Survey (F-JAS) 208

Critical Incidents 209

Other Sources of Job Information and Job-AnalysisMethods 210

The Job Analysis Wizard 211

Incorporating Personality Dimensions into Job Analysis 211

Strategic or Future-Oriented Job Analyses 212

Competency Models 213

Contents

Interrelationships among Jobs, Occupational Groups,and Business Segments 213

Occupational Information—From the Dictionaryof Occupational Titles to the O*Net 214• Evidence-Based Implications for Practice 216

Discussion Questions 216

Chapter 10 Strategic Workforce Planning 217At a Glance 217

What Is Workforce Planning? 218

Strategic Business and Workforce Plans 219

An Alternative Approach 220

Payoffs from Strategic Planning 221

Relationship of HR Strategy to Business Strategy 222

Talent Inventory 224

Information Type 224

Uses 225

Forecasting Workforce Supply and Demand 225

External Workforce Supply 225

Internal Workforce Supply 226

Leadership-Succession Planning 226

Chief Executive Officer (CEO) Succession 228

Workforce Demand 229

Pivotal Jobs 229

Assessing Future Workforce Demand 230

How Accurate Must Demand Forecasts Be? 230

Integrating Supply and Demand Forecasts 230

Matching Forecast Results to Action Plans 230

Control and Evaluation 232

Monitoring Performance 232

Identifying an Appropriate Strategy for Evaluation 233

Responsibility for Workforce Planning 233• Evidence-Based Implications for Practice 234

Discussion Questions 234

Chapter 11 Recruitment 235At a Glance 235

Recruitment Planning 237

Staffing Requirements and Cost Analyses 239

Source Analysis 241

Operations 242

External Sources for Recruiting Applicants 242

Managing Recruiting Operations 245

Contents xi

Measurement, Evaluation, and Control 247

Job Search from the Applicant's Perspective 248

Realistic Job Previews 249• Evidence-Based Implications for Practice 252

Discussion Questions 252

Chapter 12 Selection Methods: Part I 253At a Glance 253

Recommendations and Reference Checks 253

Personal History Data 255

Weighted Application Blanks (WABs) 256

Biographical Information Blanks (BIBs) 256Response Distortion in Application Forms

and Biographical Data 257

Validity of Application Forms and Biographical Data 259

Bias and Adverse Impact 260

What Do Biodata Mean? 260

Honesty Tests 261

Evaluation of Training and Experience 263

Computer-Based Screening 264

Drug Screening 265

Polygraph Tests 267

Employment Interviews 268

Response Distortion in the Interview 268

Reliability and Validity 269

Factors Affecting the Decision-Making Process 270

Social/Interpersonal Factors 270

Cognitive Factors 271

Individual Differences 273

Effects of Structure 275

Use of Alternative Media 278

Needed Improvements 278

Toward the Future: Virtual-Reality Screening (VRT) 280• Evidence-Based Implications for Practice 280

Discussion Questions 281

Chapter 13 Selection Methods: Part II 282At a Glance 282

Criteria of Managerial Success 283

The Importance of Context 284

Instruments of Prediction 285

Cognitive Ability Tests 285

Objective Personality Inventories 287

xii Contents

Leadership-Ability Tests 291

Projective Techniques 293

Motivation to Manage 293

Personal-History Data 297

Peer Assessment 297

Work Samples of Managerial Performance 298

Leaderless Group Discussion (LGD) 300

The In-Basket Test 300

The Business Game 302

Situational Judgment Tests (SJT) 302

Assessment Centers (AC) 303

Assessment Center: The Beginnings 304

Level and Purpose of Assessment 305

Duration and Size 305

Assessors and Their Training 306

Performance Feedback 307

Reliability of the Assessment Process 307

Validity 308

Fairness and Adverse Impact 309

Assessment Center Utility 309

Potential Problems 310

Combining Predictors 311• Evidence-Based Implications for Practice 313

Discussion Questions 314

Chapter 14 Decision Making for Selection 315At a Glance 315

Personnel Selection in Perspective 315

Classical Approach to Personnel Selection 316

Efficiency of Linear Models in Job-Success Prediction 318

Unit Weighting 318

Suppressor Variables 319

Data-Combination Strategies 320Effectiveness of Alternative Data-Combination

Strategies 321

Alternative Prediction Models 322

Multiple-Regression Approach 322

Multiple-Cutoff Approach 323

Multiple-Hurdle Approach 326

Extending the Classical Validity Approach to SelectionDecisions: Decision-Theory Approach 328

The Selection Ratio 328

Contents xiii

The Base Rate 330

Utility Considerations 331

Eva I uation of the Decision-Theory Approach 331

Speaking the Language of Business: Utility Analysis 332

The Naylor-Shine Model 333

The Brogden-Cronbach-Gleser Model 334

Further Developments of theBrogden-Cronbach-Gleser Model 335

Application of the Brogden-Cronbach-Gleser Modeland the Need to Scrutinize Utility Estimates 337

The Strategic Context of Personnel Selection 341• Evidence-Based Implications for Practice 342

Discussion Questions 342

Chapter 15 Training and Development: Considerations in Design 343At a Glance 343

Training Design 345

Characteristics of Effective Training 345

Additional Determinants of Effective Training 346

Fundamental Requirements of Sound Training Practice 346

* Defining What Is to Be Learned 349

The Training and Development Subsystem 349

Assessing Training Needs 350

Organization Analysis 351

Demographic Analysis 351

Operations Analysis 351

Person Analysis 353

Individual Development Plans (IDPs) 353

Training Objectives 353

Creating an Optimal Environment for Training and Learning 354

Team Training 355

Theoretical Models to Guide Training and Development Efforts 357

Trainability and Individual Differences 357

Principles that Enhance Learning 358

Knowledge of Results (Feedback) 358

Transfer of Training 359

Self-Regulation to Maintain Changes in Behavior 360

Adaptive Guidance 361

Reinforcement 361

Practice 362

Active Practice 362

Overlearning 362

xiv Contents

Length of the Practice Session 362

Motivation 363

Goal Setting 364

Behavior Modeling 365• Evidence-Based Implications for Practice 366

Discussion Questions 367

Chapter 16 Training and Development: Implementationand the Measurement of Outcomes 368At a Glance 368

Computer-Based Training 370

Selection of Technique 371

Measuring Training and Development Outcomes 371

Why Measure Training Outcomes? 372

Essential Elements for Measuring Training Outcomes 372

Criteria 373Additional Considerations in Measuring the Outcomes

of Training 375

Strategies for Measuring the Outcomes of Training in Termsof Financial Impact 376

Influencing Managerial Decisions with Program-EvaluationData 378

Classical Experimental Design 379

Design A 381

Design B 381

Design C 382

Design D 382

Limitations of Experimental Designs 384

Quasi-Experimental Designs 385

Design E 386

Design F 387

Design G 388

Design H 388

Statistical, Practical, and Theoretical Significance 389

Logical Analysis 390• Evidence-Based Implications for Practice 391

Discussion Questions 391

Chapter 17 International Dimensions of Applied Psychology 392At a Glance 392

Globalization, Culture, and Psychological Measurement 392

Globalization and Culture 393

Country-Level Cultural Differences 394

Contents xv

The Globalization of Psychological Measurement 396

Transporting Psychological Measures across Cultures 396

Terminology 397

Identification of Potential for International Management 397

Selection for International Assignments 399

General Mental Ability 399

Personality 400

Other Characteristics Related to Success in InternationalAssignments 401

Cross-cultural Training 403

Performance Management 405

Performance Criteria 405

Repatriation 408

Planning 408

Career Management 409

Compensation 409• Evidence-Based Implications for Practice 409

Discussion Questions 410

Chapter 18 Organizational Responsibility and Ethical Issuesin Human Resource Management 411At a Glance 411

Organizational Responsibility: Definition and General Framework 412

Organizational Responsibility: Benefits 414

Organizational,Responsibility: Implementation andthe Role of HRM Research and Practice 416

Employee Privacy 419

Safeguarding Employee Privacy 420

Fair Information Practice in the Information Age 421

Employee Searches and Other Workplace Investigations 422

Testing and Evaluation 423

Obligations to One's Profession 424

Obligations to Those Who Are Evaluated 425

Obligations to Employers 426

Individual Differences Serving as Antecedentsof Ethical Behavior 427

Ethical Issues in Organizational Research 428

Ethical Issues at the Research-Planning Stage 428

Ethical Issues in Recruiting and Selecting ResearchParticipants 429

Ethical Issues in Conducting Research: Protecting ResearchParticipants' Rights 429

Ethical Issues in Reporting Research Results 431

xvi Contents

Strategies for Addressing Ethical Issues in OrganizationalResearch 432

Science, Advocacy, and Values in Organizational Research 434• Evidence-Based Implications for Practice 436

Discussion Questions 436

Appendix A Scientific and Legal Guidelines on Employee SelectionProcedures—Checklists for Compliance 437

Scientific Guidelines—Summary Checklist 437

Sources of Validity Evidence 437

Choice of Predictors 438

Choice of Participants 438

Data Analysis for Criterion-Related Validity 439

Generalizing Validity Evidence 440

Fairness and Bias 441

Operational Considerations 441

Requirements 441

Communicating the Effectiveness of Selection Procedures 443

Appropriate Use of Selection Procedures 443

Legal Guidelines on Employee Selection Procedures 445

1. Adverse Impact 445

2. Validation 446

3. Criterion-Related Validity 447

4. Content Validity 449

5. Construct Validity 450

6. Validity Generalization 450

7. Application 451

Appendix B An Overview of Correlation and Linear Regression 453

The Concept of Correlation 453

The Concept of Regression 454

Making Predictions Based on Multiple Predictors 457

Predictive Accuracy of Multiple Regression 459

Appendix C Decision Trees for Statistical Methods 461

References 464

Subject Index 517

Author Index 522