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Selection System and Performance-Based pay implementation

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  • Higher pay dispersion sends a clearer signal to good performers that better alternative opportunities exist in other organizations
  • Proposal Real

    1. 1. Proposal for Selection System and Performance-Based Pay Implementation for the Department of Child and Family Welfare 2009 Divergent Consulting Inc.
    2. 2. Divergent Consulting Inc.• Previous clients include:  Allstate Insurance Company  Sylvan Learning Systems  U.S. Army Research Institute  Walt Disney World Company  Walter Reed Army Institute of Research We deal with issues such as poor performance, turnover, and dysfunctional leadership We develop strategies to address organizational weaknesses and measure outcomes of training and incentive programs to evaluate costs and benefits High success rate with past clients We will assist DCF in attaining a healthy and high performing workforce
    3. 3. DCF’s Current Concerns High turnover rate (around 300%) of field workers DCF would like to implement:  A selection system to reduce turnover  A stress management program to reduce turnover  A new pay scale to reduce turnover
    4. 4. What will be discussed Selection Systems  Selection Criteria  Selection Methods  Criteria and Stress  Probationary Period Overview  Recommendation for a New Selection System Stress and Stress Management  Advantages and Disadvantages of Stress Management Programs Pay Plans  Pay-For-Performance Systems  Advantages and Disadvantages of Variable and Merit Pay Plans  Performance Appraisal Overview  Recommendations for Stress Management and Pay System
    5. 5. Selection Systems “You can teach a turkey to climb a tree, but it’s easier to hire a squirrel” - Lyle Spencer  Problem: Don’t know the applicant’s job performance  Solution: Predict applicant’s job performance  DCF ‘s current selection system o Is the current method the most effective system for choosing field workers?
    6. 6. Selection Criteria- GMA• Best Predictor of: 1. Job performance 2. Gaining job knowledge on the job 3. Performance in job training programs • Applicants most• Good predictor of task performance likely to learn and to perform Predictiv well on the job e • Predict performance in most jobs 26% GMA 1. Tests measure Single • Cost effective Advanta tests ges • Not influenced by faking 2. Tests that measure abilities and GMA • Group Disadvantag differences  es adverse impact
    7. 7. Selection Criteria- Personality Big FiveNeuroticismInsecurity, indecisiveness, anxiety Best predictors Also predict behaviors thatConscientiousness GMAAmbitious, practical, persistent cannotExtraversionAssertiveness, boldness, sociabilityOpenness to experienceImaginative, original, independenceAgreeablenessAltruism, trustworthiness, cooperation • Most assess Big Big Five Five Personalit Occupatio •Criterion-focused Occupational y Tests nal Personality Scales Personality Scales o Integrity, drug and alcohol, stress tolerance, customer service
    8. 8. Selection Criteria and Stress - Personality traits relate to stress • More stressful events and High distress Neuroticism • Maladaptive ways of coping • More stressful and more High pleasurable events Extraversion • Active coping strategies High • Active problem solvingConscientiousne • Refrain from maladaptive ss coping
    9. 9. Tap into Not good conscientiousn predictors of ess, agreeable stress ness, and tolerance criteria emotional stability Stress Tolerance Scales Good 1. Predict handling work pressures well Goodpredictors of predictors of counter- 2. Identify job jobproductive applicants who are not performance behaviors tense and anxious
    10. 10. Selection Criteria- Job Experience 0-5 years of experience predicts about 11% of job performance •New hires in 1-5 year range predicts performance well for about first 3 years on the jobYounger and less trainedemployees more likely toturnover
    11. 11. Selection Methods - Interviews Applicant Interviewers learns more about the job  information on empathy, and organization personal initiative, and develops realistic applied social skills expectations Interviews 99% of organizations use some form of interview Unstructured Structured (best kind) Exact opposite of unstructuredNo fixed format or set of questions interviews Same interviewer often asks Questions determined by job different questions analysis No fixed procedure for scoring More valid
    12. 12. Interviews Cont. Interview Questions • Candidates • Describe what asked what they did in past they would do jobs as it in hypothetical relates to situation requirements of the job Situational Behavioral Backgroun Job d knowledge• Focus on work • Candidates experience, ed describe, docu ucation, and ment, or other demonstrate qualifications their job knowledge
    13. 13. Interviews Cont. Advantages Disadvantages
    14. 14. Probationary Periods Popular in US Good for Other Advantages Organizations Unionized FirmsGet information not Protect from bad Helps attractavailable before hiring hiring choices applicants with desirable qualities•Workers can be laid offbefore firms haveinvested heavily in them Workers discharged typically have no Helps organizations•Probation  higher net recourse to union obtain the kind ofreturns than monitoring grievance procedures workers they wantworkers on intermittentbasis
    15. 15. Recommendations for a New Selection SystemOne applicant pool and • Disparate treatment or impact one selection system could occur if more than one2 or more years Social • Will have relevant jobWork experience or knowledge, skills, and abilitiesdegree in Social Work • Single measure of GMA GMA Test • Purchase Test • Personality test that measures Personality Test Big Five • Purchase test
    16. 16. Recommendations Cont. • Assess applicants’ experience and job Structured Interview knowledge with Behavior-Based Questions • Assess applicant’s stress tolerance, or behavior • Regardless of academic background or prior experience, new hires should: (1) Be aware of organization’s policies, culture, and mission (2) understand the goals and requirements ofProbationary Period and their work area and (3) use specific areas On-the-Job Training of knowledge, skills, and attitudes to do their jobs • Permanent position and benefits if completed successfully
    17. 17. Stress Overview• Stress response stressor or stress distress or demand response strain Stress Direct costs- turnover, absenteeism, health care, compensation awards Indirect costs- poor morale, job dissatisfaction, poor performance Job stress estimated to cost the American industry $150 billion dollars annually
    18. 18. Stress Cont.Level Purpose TechniquePrimary •Modify or eliminate sources •Redesign tasks or job of stress that happen in work •Redesign work environment environment •Flexible work schedulesSecondary •Improve stress management •Stress management programs skills to teach: oRelaxation techniques •Help deal with stressors coming oCognitive coping skills from the work environment that oWork/lifestyle modification cannot be changed skills, such as time management •Help deal with stress that is non-work relatedTertiary •Reduce the employee’s •Typically done through distress counseling programs
    19. 19. Stress Management Programs Advantages Disadvantages• Cost effective • Most conducted at secondary • Up to 75% decrease in sickness and accident cost and tertiary levels • 200% to 800% ROI • Insufficient• Reduced absenteeism • Complement with primary • Up to 14% decline in absenteeism level programs • Up to 60% reduction in 1 year• Decreased job tension and stress • Optional participation attracts • Many programs "worried well" versus extremely• Increased satisfaction distressed • Many programs
    20. 20. Pay Plan Overview Seniority-Based Systems Turnover of high performers Protect average and poor performers Performance must meet only a minimum standard Pay-for-Performance•Purpose: Systems Motivate performance Recognize differential employee Variable Pay contributions Plans Piece Profit sharing, Gain Merit Group Incentive rates, Bonuses, Commiss sharing, Bonuses Plans Plans ions •Focus on •Work •Individual’s •Group’s individual’s group, facility, performance performance levels of organization performanc performance •Reward not •Not added to e •Added to added to the the base salary •Added to base salary base salary
    21. 21. Variable Pay Plans 1. Success rate = HIGH Advantages 2. Organizational performance = INCREASED 3. Productivity = INCREASED 5. Costs = LOWER 6. Absenteeism and turnover = LOWER 7. Employee attitudes = MORE FAVORABLE 8. Payouts = LARGER and FREQUENT 1. Poorly designed system = FAILURE 2. If the hurdle for achieving payout is too high = employee GIVES UP 3. If payout achievement too easy= NO BEHAVIOR CHANGE 4. Employees can neglect aspects of job not covered in performance goals 5. Less motivation for employee
    22. 22. Merit Pay Plans 1. Outstanding performers= HIGHER PAY Advantage LEVEL 2. Works with unionized employees s 3. Salary growth = CUMULATIVE and LONG TERM 4. Employee job satisfaction = HIGH 5. Perceptions pay and performance link = HIGH 6. Pay and performance = BETTER LINK 1. Performance appraisal objectives= LESS SPECIFIC 2. Objectives seen as less doable and not linked to performance 3. Pay increases smaller and viewed as less meaningful 4. Adding pay increases into base salaries may weaken the pay for performance link Disadvanta
    23. 23. Performance Appraisal 2 mainAccurately assess level of goals: Evaluation system to advanceindividual’s job operational functionsperformance o 1. All employees evaluated o 2. All key job-related responsibilities measured o 3. All measures relate to job performance o 4. Performance measurement includes only matters under employee’s control o 5. Employees give their own performance evaluations 6. Discussion of performance Between superior and subordinate before
    24. 24. Recommendations for Stress Management and Pay System • To reduce stress, we recommend that a stress management workshop is offered to Stress employeesManagement • Areas to be covered determined once current employees surveyed concerning what causes them distress • We recommend that DCF implement a merit pay system because:Pay System • Used for many different groups of employees • Establish a better link between pay and performancePerformance • Develop a performance appraisal system whereby supervisors evaluate employees’ Appraisal performance to tie in performance with pay
    25. 25. Proposal Data Collection and Planning Job Supervisors Position AnalysisAnalysis Questionnaire (PAQ) Five field workers  workshop to describe the work that they do in their jobs GMASelection Wonderlic Personnel Test (WPT) System High construct validity and reliability test-retest reliabilities of .82 to .94 Personality NEO Personality Inventory-Revised Test-retest reliabilities over a six month period ranging from .86 to .91 Interview Assess stress tolerance, past experience, and job knowledge Structured and ask behaviorally-based questions Interviewers will attend training Develop questions based off of competencies identified through job analysis
    26. 26. Data Collection and Planning Cont.Probationar y Training Trainers Period Field workers who are high performers with good interpersonal skills Training Program SMEs develop content and structure Trainer Training • Prepare their trainee • Present the training • Ask for a response from their trainee • Provide feedback to their trainee • Evaluate their trainee’s performance Evaluation Trainees self-report evaluation of his or her learning progress Trainer observe trainee and rate their performance
    27. 27. Data Collection and Planning Cont. StressManagement Employee Survey Workshop - All current field workers - 10-15 minutes and 1 week to complete - Results analyzed and presented to management - The consultant will work with SMEs to design workshop Workshop - Interactive lectures and role playing concerning: - Recognizing and understanding stress - Stress reduction techniques - Workshop is optional and offered on Tuesdays after the workday - Eight weeks - One hour long Workshop Leader - The workshop will be led by a supervisor from DCF - Trained on stress process, coping strategies, managing the stressors identified in survey, and stress reduction techniques
    28. 28. Data Collection and Planning Cont. Pay-for-Performanc e Plan Joint Effort Supervisors and field workers involved in development Performance Areas SMEs will determine important tasks employee must be able to perform well and other dimensions important for success Rater Training - Interactive lectures and videos on: - How system will work - Tasks and dimensions to be rated - How to accurately rate and observe - Discussion of types of rating errors and brainstorming on how to avoid them - Trainees will rate behaviors presented on videotape and identify similar behaviors in the workplace
    29. 29. Implementation and Evaluation  Interviewer, Rater, On-the-Job Trainer Training Pre-test Questionnaire on knowledge and Post-test abilities of the training material • t-test will be used to compare the tests and determine if there is a difference between scores  Selection System- ImplementationScreening NEO-PI-R Interview Wonderlic Test • Applicants • About30-45 • Conduct • Structured given 12 minutes to and ed on the minutes complete phone behavior- • Score 20 • Score high on based or above conscientious • 2 ness and low interviewer on s neuroticism •A multiple hurdle approach will be used
    30. 30. Implementation and Evaluation Cont.Selection System- Evaluation1. Compare rates across differenttimes Measure turnover Measure turnover Measure overall rates and job rates and jobturnover rate and job performance of new performance of new performance before employees six employees after implementation months after another six months implementation 2. Assess the utility of the system- Cost Benefits Analysis Cost of selection system test Job Performance
    31. 31. Implementation and Evaluation Cont. On-the-Job Training 1. Effectiveness of training Post-test 1. Reaction to the training Training 2. Knowledge, skills, abilities, tasks, and behaviors learned while in training2. Evaluate employee’s performance 3 months 6 months 1 year3. Return on investment of the training Cost of the training Monetary benefits
    32. 32. Implementation and Evaluation Cont.  Stress Management Workshop- Evaluation Before Workshop After workshop1. Assess employee’s stress 1. Assess stress levelslevels 2. Assess effectiveness of2. Assess effectiveness of coping skillscoping skills  Performance Appraisal- Implementation  As soon as they are designed and all raters have successfully completed training  Performance Appraisal- Evaluation 1. Employee’s perceptions of fairness of the process and their satisfaction with the process After Performance Appraisal Performance Appraisal Employees fill out aConducted by manager questionnaire
    33. 33. Implementation and Evaluation Cont. Pay Plan- Evaluation 1. Assess if pay practice follows pay policy Correlation Pay Performanc e • Stronger the correlation between merit increases and performance ratings  stronger the link between pay and performance 2. Assess employees’ satisfaction and fairness perceptions After Implementation Before Implementation Questionnaire Questionnaire3. Assess the utility of the system Current revenue and expenses Revenue and expenses after the plan has paid out
    34. 34. Timeline Job analysis PAQ about 2 months Group meetings Purchasing tests, developing Selection System interview questions, training about 2 months interviewers, pre- evaluation measures 2 weeks to select trainers, 2 On-the-Job Training weeks to train trainers, pre- about 2 ½ months tests, developing training content Stress Workshop Stress survey, pre- tests, creating workshop about 2 ½ months content, training leaders Collecting data onPerformance Appraisal job, developing performance about 3 months standards, creating rating scales, rater training Pay Plan pre-tests, how to use system, developing monetary about 1 month amounts, budget analysis
    35. 35. Timeline Cont. Timeline Data Development Implementation Total CollectionJob Analysis 2 months 2 monthsSelection System 2 weeks 2 weeks 1 month 2 monthsOn-the-Job 2 weeks 1 month 1 month 2 ½ monthsTrainingStress Workshop 2 weeks 1 month 1 month 2 ½ monthsPerformance 1 month 1 month 1 month 3 monthsAppraisalPay Plan 1 month 1 monthEvaluation #1 1 month 14 months • With the total estimated time of implementation being approximately 14 months, Divergent Consulting Inc. will be able to finish these projects within the
    36. 36. Fees and Expenses• Consultant’s fee: $100 per hour If DCF needs additional legal support than we have previously allotted, the following charges will apply:  Data Analysis- $45 per hour  Deposition- $ 175 per hour  Witness Stand- $200 per hour PAQ Costs: $39.00 each Wonderlic Personnel Test  Package $1925  Test Booklets (500)  Answer Sheets (500) NEO-PI-R  Test Booklets (Reusable) Form S (10): $102.95  NEO PI-R Manual: $106.95  NEO PI-R Profile Forms(25): $102.95  Answer Sheets(25): $102.95
    37. 37. Fees and Expenses Cont. On-the-job training development, performance appraisal development, interviewer training, on-the-job trainer training, and rater training  Meeting of Managers (subject matter experts): Duty included in manager salary  Manager Training:  Trainer fee: $150 per session  2 for interview training  3 for on-the-job training  4 for performance appraisal  Manager: Duty included in manager salary Stress Workshop  Meeting of managers (subject matter experts): Duty included in manager salary  Manager training:  Trainer fee: $150 per session  3 sessions  Manager: Duty included in manager salary  Lecture Materials: $1500 for DCF’s use
    38. 38. Cost of Project Cost Hours Unit Other Needs Total sConsultant $100/hr 20 per a$104,000 weekPAQ $39 per unit b70 $2,430Wonderlic $19.25 per c500 $1,925 500NEO-PI-R $14.90 per c500 $106.95 for $7,565.25 unit manualInterview $4,000 d$4,000On-the-Job Training $3,500 d$3,500 e500 $10 per workbookStress Workshop $150 per 160 $30,500 session session $1500 for lecture sPerformance Appraisal $4500 d$4,500Training: Interviewer $150 per 2 f140 $42,000 session session sTraining: On-the-Job Trainer $150 per 3 g250 $112,500 session session s
    39. 39. Cost of Project Table- Assumptions a Assumption: 20 hours per week for one year b Assumption: 1 manager per county office c Assumption: 500 units initially ordered d Assumption: Total cost for data collection and design e Assumption: About 500 employees will participate f Assumption: 2 managers per county office g Assumption: About 250 field workers will need to be trained hAssumption: Evaluation of selection system, on-the-job training, stress workshop, performance appraisal, and pay plan
    40. 40. References Allan, P., & Rosenberg, S. (1986). An assessment of merit pay administration under New York Citys managerial performance evaluation system: three years of experience. Public Personnel Management , 15, 297-309. Asumen, K. H., Namazi, K. H., & Kahana, E. F. (1997). Commitment and turnover among women working in facilities serving older persons. Research on Aging , 19 (2), 223-246. Berry, L. M. (2003). Employee Selection. Belmont, CA: Wadsworth/Thompson Learning. Bolger, N. (1990). Coping as a personality process: a prospective study. Journal of Personality and Social Psychology , 59, 525–537. Bragger, J. D., Kutcher, E., Morgan, J., & Firth, P. (2002). The effects of the structured interview on reducing biases against pregnant job applicants. Sex Roles , 46 (7/8), 215- 226. Campion, M. A., Pursell, E. D., & Brown, B. K. (1988). Structured interviewing: Raising the psychometric properties of the employment interview. Personnel Psychology , 41 (1), 25-42. Campion, M., Palmer, D., & Campion, J. (1997). A review of structure in the selection interview. Personnel Psychology , 50 (3), 655-702. Cascio, W. F., & Aguinis, H. (2005). Applied Psychology in Human Resource Management. New Jersey: Pearson Prentice Hall. Cooper, C. L., & Cartwright, S. (1997). An intervention strategy for workplace stress. Journal of Psychosomatic Research , 43 (1), 7-16. De Corte, W. (1994). Utility analysis for the one-cohort selection-retention decision with a
    41. 41. References Cont. Egdahl, R., & Walsh, D. (1980). Mental Wellness Programs for Employees. New York: Springer-Verlag. Everly, G., & Girdano, D. A. (1980). Stress Mess Solution. The Causes and Cures of Stress on the Job. Bowie: Prentice Hall. Fay, C., & Latham, G. (1982). Effects of training and rating scales on rating errors. Personnel Psychology , 35, 105-116. Hackman, R., Lawler, E., & Porter, L. (1977). Perspectives on Behavior in Organizations. New York: McGraw-Hill. Hancock, P. A., & Desmond, P. A. (2001). Stress, Workload, and Fatigue. Lawrence Erlbaum Associates. Heneman, R. L. (1992). Merit Pay: Linking Pay Increases to Performance Ratings. New York: Addison-Wesley Publishing Company. Heneman, R. L. (2002). Strategic Reward Management: Design, Implementation, and Evaluation. IAP. Jacobs, R. J. (2003). Structured On-The-Job Training. San Francisco: Berrett-Koehler Publishers, Inc. James, L. R., & Mazerolle, M. D. (2002). Personality in Work Organizations. London: Sage Publications. Janz, T. (1982). Initial comparisons of patterned behaviour description interviews versus unstructured interviews. Journal of Applied Psychology ,
    42. 42. References Cont. Janz, T. (1989). The employment interview: Theory, research, and practice. In G. Ferris, & R. Eder Ferris, G. R., Witt, L. A., & Hochwarter, W. A. (2001). Interaction of social skill and general mental ability on job performance and salary. Journal of Applied Psychology , 86 (6), 1075-1082.(Eds.), The Patterned Behavior Description Interview:The Best Prophet of the Future (pp. 158-167). Newbury Park, CA: Sage. Janz, T. (1989). The Patterned Behavior Description Interview. In R. Eder, & G. Ferris (Eds.), The Employment Interview (pp. 158-168). Newbury Park, CA: Sage. Ferris, G. R., Witt, L. A., & Hochwarter, W. A. (2001). Interaction of social skill and general mental ability on job performance and salary. Journal of Applied Psychology , 86 (6), 1075-1082.(Eds.), The Patterned Behavior Description Interview:The Best Prophet of the Future (pp. 158-167). Newbury Park, CA: Sage. Janz, T. (1989). The Patterned Behavior Description Interview. In R. Eder, & G. Ferris (Eds.), The Employment Interview (pp. 158-168). Newbury Park, CA: Sage. Judge, T. A., & Cable, D. M. (1997). Applicant personality, organizational culture, and organization attraction. Personnel Psychology , 50 (2), 359. Lawler, E. (1981). Pay and Organizational Development. Reading, MA:
    43. 43. References Cont. Locke, E. A. (2000). The Blackwell Handbook of Principles of Organizational Behavior. Blackwell Publishing. Manlove, E. E., & Guzell, J. R. (1997). Intention to leave, anticipated reasons for leaving, and 12- month turnover of child care staff. Early Childhood Research Quarterly , 12, 145-167. Manuso, J. (1984). Stress: Management of individual stressors. In M. ODonnell, & T. Ainsworth (Eds.), Health Promotion in the Workplace (pp. 362-390). New York: John Wiley & Sons. Milkovich, G. T., & Wigdor, A. K. (Eds.). (1991). Pay for Performance: Evaluating Performance Appraisal and Merit Pay. Washington D.C.: National Academy Press. Mor Barak, M. E., Nissly, J. A., & Levin, A. (2001). Antecedents to retention and turnover among child welfare, social work, and other human service employees: What can we learn from past research? A review and metanalysis. Social Service Review , 625-661. Mount, M. K., & Barrick, M. R. (2000). Incremental validity of empirically keyed biodata scales over GMA and the five factor personality constructs. 53 (2), 299-323. Ones, D. S., & Viswesvaran, C. (2001). Criterion-focused occupational personality scales used in personnel selection. In B. Roberts, & R.
    44. 44. References Cont. Ones, D., Dilchert, S., Viswesvaran, C., & Judge, T. (2007). In support of personality assessment in organizational settings. Personnel Psychology , 60, 995-1027. Pace, V. L., & Borman, W. C. (2006). The use of warnings to discourage faking on noncognitive inventories. In V. L. Pace, W. C. Borman, & R. Griffith (Ed.), A closer examination of applicant faking behavior (pp. 283- 304). Greenwich, CT: Information Age Publishing, Inc. Penley, J. A., & Tomaka, J. (2002). Associations among the Big Five, emotional responses, and coping with acute stress. Personality and Individual Differences , 32, 1215-1228. Pulakos, E., & Schmitt, N. (1995). Experience-based and situational interview questions: Studies of Validity. Personnel Psychology , 48 (2), 289. Quick, J. C., Quick, J. D., Nelson, D. L., & Hurrell, J. J. (1997). Preventative Stress Management in Organizations. Washington D.C.: American Psychological Association. Rothstein, M. G., & Goffin, R. D. (2006). The use of personality measures in personnel selection: What does current research support? Human Resource Management Review , 16, 155–180. Schaubroeck, J., Shaw, J. D., Duffy, M. K., & Mitra, A. (1998). An under- met and over-met expectations model of employee reactions to merit raises. Journal of Applied Psychology, 93 (2), 424–434. Schmidt, F. L., & Hunter, J. E. (1998). The validity and utility of selection
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    46. 46. References Cont. Trevor, C. O., Gerhart, B., & Boudreau, J. W. (1997). Voluntary turnover and job performance: Curvilinearity and the moderating influences of salary growth and promotions. Journal of Applied Psychology , 82 (1), ,44-6. Ulrich, L., & Trumbo, D. (1965). The selection interview since 1949. Psychological Bulletin , 63, 100-116. Van Clieaf, M. S. (1991). In search of competence: structural behavior interviews. Busines Horizons , 34 (2), 51. Vandenberghe, C., & Tremblay, M. (2008). The role of pay satisfaction and organizational commitment in turnover intentions: A two-sample study. Journal of Business Psychology , 22, 275-286. Vollrath, M., & Torgersen, S. (2000). Personality types and coping. Personality and Individual Differences , 29 (2), 367-378 . Vollrath, M., Torgersen, S., & Alnæs, R. (1995). Personality as long-term predictor of coping. Personality and Individual Differences , 18, 117– 125. Wilson, T. B. (2003). Innovative Reward Systems for the Changing

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