Seven Common Misconceptions About HR Practices

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Seven Common Misconceptions Seven Common Misconceptions About Human Resource Practices:About Human Resource Practices:

Research Findings Versus Research Findings Versus Practitioner BeliefsPractitioner Beliefs

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The Strategic View The Strategic View of Human of Human ResourcesResources

Employees are Employees are human assetshuman assets Increase in value to organization and marketplace when Increase in value to organization and marketplace when

investments of appropriate policies & programs are appliedinvestments of appropriate policies & programs are applied Effective organizations recognize that employees have valueEffective organizations recognize that employees have value

Much as organization’s physical & capital assets have valueMuch as organization’s physical & capital assets have value Employees are valuable source of Employees are valuable source of sustainable competitive sustainable competitive

advantageadvantage

Seven Common Misconceptions About Human Resource Practices

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Sources of Employee Sources of Employee ValueValue


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Sources of Employee ValueSources of Employee Value

Technical KnowledgeTechnical Knowledge Markets, processes, customers, environmentMarkets, processes, customers, environment

Technical KnowledgeTechnical Knowledge Markets, processes, customers, environmentMarkets, processes, customers, environment

Ability to Learn and GrowAbility to Learn and Grow Openness to new ideasOpenness to new ideas Acquisition of knowledge & skillsAcquisition of knowledge & skills

Decision Making CapabilitiesDecision Making Capabilities MotivationMotivation CommitmentCommitment TeamworkTeamwork

Interpersonal skills, leadership abilityInterpersonal skills, leadership ability


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Findings

HR practices directly related to profitability & market HR practices directly related to profitability & market valuevalue

Primary reason for profitability: Primary reason for profitability: Effective management of human capitalEffective management of human capital

Integrated management of human capital can result Integrated management of human capital can result in 47% increase in market valuein 47% increase in market value

Top 10% of organizations studied experienced 391% Top 10% of organizations studied experienced 391% return on investment in management of human return on investment in management of human capitalcapital


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HR Value ChainHR Value Chain


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Model for Management Model for Management SuccessSuccess


Strengthen key Strengthen key relationshipsrelationships CustomersCustomers EmployeesEmployees ShareholdersShareholders

Leverage downtimeLeverage downtime Use variable-payUse variable-pay Address Address

neglected areas:neglected areas:• InfrastructureInfrastructure• MarketingMarketing• OperationsOperations

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Model for Management Model for Management SuccessSuccess


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Seven Common MisconceptionsSeven Common Misconceptions

1.1. Conscientiousness is a better predictor of Conscientiousness is a better predictor of performance than intelligence.performance than intelligence.

2.2. Companies that screen job applicants for values Companies that screen job applicants for values have higher performance than those that screen have higher performance than those that screen for intelligence.for intelligence.

3.3. Integrity tests don’t work well in practice because Integrity tests don’t work well in practice because so many people lie on them.so many people lie on them.

4.4. Integrity tests have adverse impact on racial Integrity tests have adverse impact on racial minorities.minorities.


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Seven Common MisconceptionsSeven Common Misconceptions

5.5. Encouraging employee participation is more Encouraging employee participation is more effective for improving organizational performance effective for improving organizational performance than setting performance goals.than setting performance goals.

6.6. Most errors in performance appraisal can be Most errors in performance appraisal can be eliminated by providing training to managers on eliminated by providing training to managers on how to avoid them.how to avoid them.

7.7. If employees are asked how important pay is to If employees are asked how important pay is to them, they are likely to overestimate its true them, they are likely to overestimate its true importance.importance.


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1.1. Select new employees on both intelligence and Select new employees on both intelligence and conscientiousness.conscientiousness.

2.2. Assess intelligence and conscientiousness Assess intelligence and conscientiousness before values. before values.

3.3. Define the values that are important and assess Define the values that are important and assess them through carefully developed, valid them through carefully developed, valid procedures.procedures.

4.4. Use integrity tests with ability tests for high Use integrity tests with ability tests for high predictability.predictability.

Seven Common Misconceptions: Seven Common Misconceptions: ImplicationsImplications


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5.5. Develop compelling goals; enlist participation Develop compelling goals; enlist participation and support it through rewards.and support it through rewards.

6.6. Training and feedback are important, but errors Training and feedback are important, but errors are difficult to eliminate. Top managers should are difficult to eliminate. Top managers should serve as role models in quality of performance serve as role models in quality of performance reviews.reviews.

7.7. Attitude surveys are subject to biases; study Attitude surveys are subject to biases; study behaviors as well as attitudes.behaviors as well as attitudes.

Seven Common Misconceptions: Seven Common Misconceptions: ImplicationsImplications


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Effective HRM PracticesEffective HRM Practices


Employment SecurityEmployment Security Selectivity in RecruitingSelectivity in Recruiting High WagesHigh Wages Incentive payIncentive pay Employee OwnershipEmployee Ownership Information SharingInformation Sharing Participation & Participation &

OwnershipOwnership Self-Managed TeamsSelf-Managed Teams

Training & DevelopmentTraining & Development Cross-Utilization & Cross-Utilization &

Cross-TrainingCross-Training Symbolic EgalitarianismSymbolic Egalitarianism Wage CompressionWage Compression Promotion From WithinPromotion From Within Taking the Long ViewTaking the Long View Measurement of Measurement of

PracticePractice Overall PhilosophyOverall Philosophy

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Effective HRM PracticesEffective HRM Practices


Very few firms will engage in all Very few firms will engage in all practicespractices

While these practices are important for While these practices are important for success, there are other determinants success, there are other determinants as wellas well

Downsides existDownsides exist Requires more involvement and Requires more involvement and

responsibility than some employees wantresponsibility than some employees want Managers & others may resist them as wellManagers & others may resist them as well Turnover may resultTurnover may result

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Defensible Selection

What is “validity”?

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So how often do these lawsuits happen, anyway?


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Ehh..what’s the worst thing that could happen?


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But validation is so expensive!

$$

$

$

$

$

$

Average cost of content validation: $5-20K

Median 2003 compensatory award in discrimination case:

$232K


Median settlement in discrimination case, ’96-’02:

$50-70K

Sources: Seberhagen (1990); Jury Verdict Research

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First…reality

• No selection system is perfect

• Someone can always complain


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How to Protect Yourself

1. Job analysis, job analysis, job analysis

“People will continue to measure the wrong things as long as they fail to define what they want to measure.”

- Guion (1998)


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Electronic newsletters

–www.elinfonet.com

–www.ahipubs.com

–hr.cch.com

–www.blr.com

How can I keep up on all these

changes in the law?


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Documents

Seven Common Misconceptions About HR Practices