The document discusses various methods for evaluating employee performance and making hiring decisions, including: 1) Taylor-Russell tables and Lawshe tables which estimate the likelihood of success/performance of applicants and employees based on test scores. 2) Methods for determining fairness of tests including measuring adverse impact and predictive bias across different groups. 3) Approaches to making hiring decisions such as top-down selection based on test scores, passing scores, and banding to reduce adverse impact. 4) Performance evaluation methods like forced-choice ratings, 360-degree feedback, and different types of dimensions (trait, competency, task, goal-focused) and ratings (rankings, objective measures, graphic ratings

1. Taylor-Russell tables provide an estimate of the
percentage of total new hires who will be
successful employees if a test is adopted
(organizational success);
both expectancy charts and the Lawshe tables
provide a probability of success for a particular
applicant based on test scores (individual
success);
and the utility formula provides an estimate of
the amount of money an organization will save if
it adopts a new testing procedure.
Taylor-Russell Tables
The philosophy behind the Taylor-Russell tables
is that a test will be useful to an organization if
(1) the test is valid,
(2) the organization can be selective in its hiring
because it has more applicants than openings,
and
(3) there are plenty of current employees who
are not performing well, thus there is room for
improvement.
Selection ratio – the percentage of applicants an
organization hires.
Base rate - percentage of current employees
who are considered successful.
Proportion of correct decisions – a utility method
that compares the percentage of times a
selection decision was accurate with the
percentage of successful employees.
*Determining the proportion of correct
decisions is easier to do but less accurate than
the Taylor-Russell tables.
Lawshe tables - tables that use the base rate, test
validity, and applicant percentile on a test to
determine the probability of future success for
that applicant.
Tenure - the length of time an employee has
been with an organization.
Determining the Fairness of a Test
Although there is disagreement among I/O
psychologists regarding the definition of test
fairness, most professionals agree that one must
consider potential race, gender, disability, and
other cultural differences in both the content of
the test (measurement bias) and the way in
which scores from the test predict job
performance (predictive bias; Meade &
Tonidandel, 2010).
Measurement bias - group differences in test
scores that are unrelated to the construct being
measured.
Adverse impact - an employment practice that
results in members of a protected class being
negatively affected at a higher rate than
members of the majority class. Adverse impact is
usually determined by the four fifths rule.
Predictive bias - situation in which the predicted
level of job success falsely favors one group over
another.
Single-group validity - the characteristic
of a test that significantly predicts a
criterion for one class of people but not
for another.
Differential validity - the characteristic of
a test that significantly predicts a
criterion for two groups, such as both
minorities and nonminorities, but
predicts significantly better for one of
the two groups.
Making the Hiring Decision
Multiple regression - a statistical procedure in
which the scores from more than one criterion-
valid test are weighted according to how well
each test score predicts the criterion.
Linear approaches to hiring usually take one of
four forms: unadjusted top-down selection, rules
of three, passing scores, or banding.
Top-down selection - selecting applicants in
straight rank order of their test scores (from
highest to lowest)
Advantage: highest utility
Disadvantage: Adverse impact and
reduces organizational flexibility by not

2. using non-test bases like references and
organizational fit
Compensatory approach - a method of
making selection decisions in which a
high score on one test can compensate
for a low score on another test. For
example, a high GPA might compensate
for a low GRE score.
Rule of three - variation on top-down selection
in which the names of the top three applicants
are given to a hiring authority who can then
select any of the three.
Passing score - the minimum test score that an
applicant must achieve to be considered for hire.
*reduces adverse impact and increases
flexibility
Multiple-cutoff approach - a selection
strategy in which applicants must meet
or exceed the passing score on more
than one selection test. (The relationship
is not linear between test and job
performance) *not cost effective
*With a multiple-cutoff approach, the
applicants would be administered all
of the tests at one time. If they failed
any of the tests (fell below the passing
score), they would not be considered
further for employment.
Multiple-hurdle approach - selection
practice of administering one test at a
time so that applicants must pass that
test before being allowed to take the
next test.
Banding – a statistical technique based on the
standard error of measurement that allows
similar test scores to be grouped.
EVALUATING EMPLOYEE PERFORMANCE
Step 1: Determine the Reason for Evaluating
Employee Performance
Forced-choice rating scale - A method of
performance appraisal in which a supervisor is
given several behaviors and is forced to choose
which of them is most typical of the employee.
*excellent for determining compensation but
terrible for training purposes.
*360-degree feedback is an excellent source
for improving employee performance but is
not appropriate for determining salary
increases.
Goals for performance appraisal
1. employee feedback and training,
2. determining salary increases,
3. making promotion decisions,
4. making termination decisions, and
5. conducting personnel research.
Performance appraisal review – a meeting
between a supervisor and a subordinate for the
purpose of discussing performance appraisal
results.
Peter Principle - the idea that organizations tend
to promote good employees until they reach the
level at which they are not competent—in other
words, their highest level of incompetence.
Step 2: Identify Environmental and Cultural
Limitations
Step 3: Determine Who Will Evaluate
Performance
360-degree feedback - a performance
appraisal system in which feedback is
obtained from multiple sources such as
supervisors, subordinates, and peers.
*primarily used for training and
development, and not used for salary
increase or termination and
promotion.
Multiple-source feedback - a
performance appraisal strategy in which
an employee receives feedback from
sources (e.g., clients, subordinates,

3. peers) other than just his or her
supervisor.
*subordinate feedback is also called
as upward feedback
Step 4: Select the Best Appraisal Methods to
Accomplish Your Goals
Prior to developing the actual performance
appraisal instrument, two important decisions
must be made: the focus of the performance
appraisal dimensions and whether to use
rankings or ratings.
Decision 1: Focus of the Appraisal Dimensions
Trait-Focused Performance Dimensions
A trait-focused system concentrates on
such employee attributes as dependability,
honesty, and courtesy. Though commonly used,
trait-focused performance appraisal instruments
are not a good idea because they provide poor
feedback and thus will not result in employee
development and growth.
Competency-Focused Performance Dimensions
Rather than concentrating on an
employee’s traits, competency-focused
dimensions concentrate on the employee’s
knowledge, skills, and abilities.
Task-Focused Performance Dimensions
Task-focused dimensions are organized
by the similarity of tasks that are performed. The
advantage of this approach is that because
supervisors are concentrating on tasks that occur
together and can thus visualize an employee’s
performance, it is often easier to evaluate
performance than with the other dimensions.
The disadvantage is that it is more difficult to
offer suggestions for how to correct the
deficiency if an employee scores low on a
dimension.
Goal-Focused Performance Dimensions
The fourth type of performance
dimension is to organize the appraisal on the
basis of goals to be accomplished by the
employee.
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Contextual Performance - the effort an
employee makes to get along with peers,
improve the organization, and perform tasks that
are needed but are not necessarily an official
part of the employee’s job description.
Decision 2: Should Dimensions Be Weighted?
Decision 3: Use of Employee Comparisons,
Objective Measures, or Ratings
A. Employee Comparisons (Relative)
Rank order - a method of performance
appraisal in which employees are ranked
from best to worst.
Paired comparison – a form of ranking in
which a group of employees to be
ranked are compared one pair at a time.
Forced distribution method - a
performance appraisal method in which
a predetermined percentage of
employees are placed into a number of
performance categories.
*also called as rank and yank
*least fair method of performance
appraisal.
B. Objective Measures
Quantity of Work - a type of objective
criterion used to measure job
performance by counting the number of
relevant job behaviors that occur.
Quality of Work - a type of objective
criterion used to measure job
performance by comparing a job
behavior with a standard.
Attendance - a common method for
objectively measuring one aspect of an
employee’s performance is by looking at
attendance.
*Attendance can be separated into
three distinct criteria: absenteeism,
tardiness, and tenure.

4. Safety - Another method used to
evaluate the success of an employee is
safety. Obviously, employees who follow
safety rules and who have no
occupational accidents do not cost an
organization as much money as those
who break rules, equipment, and
possibly their own bodies.
C. Ratings of Performance
Graphic rating scale – a method of
performance appraisal that involves
rating employee performance on an
interval or ratio scale.
Behavioral checklists - consist of a list of
behaviors, expectations, or results for
each dimension. This list is used to force
the supervisor to concentrate on the
relevant behaviors that fall under a
dimension.
*Contamination - the condition
in which a criterion score is
affected by things other than
those under the control of the
employee.
Behaviorally Anchored Rating Scales
(BARS),
Mixed-Standard Scales
Forced-choice Scales.
Step 5: Train Raters
Frame-of-reference training - method of
training raters in which the rater is
provided with job-related information, a
chance to practice ratings, examples of
ratings made by experts, and the
rationale behind the expert ratings.
Step 6: Observe and Document Performance
Critical incidents – a method of
performance appraisal in which the
supervisor records employee behaviors
that were observed on the job and rates
the employee on the basis of that
record.
Employee Performance
Record - a standardized use of the
critical-incident technique developed at
General Motors by Flanagan
*this method consists of a two-color
form
*Half of the sheet is used to record
examples of good behaviors, and the
other half to record examples of poor
behaviors.
Step 7: Evaluate Performance
A. Obtaining and Reviewing Objective Data
B. Reading Critical-Incident Logs
C. Completing the Rating Form
Distribution errors - rating errors in
which a rater will use only a certain part
of a rating scale when evaluating
employee performance.
Leniency error - a type of rating
error in which a rater
consistently gives all employees
high ratings, regardless of their
actual levels of performance.
Central tendency error - a type
of rating error in which a rater
consistently rates all employees
in the middle of the scale,
regardless of their actual levels
of performance.
Strictness error - a type of rating
error in which a rater
consistently gives all employees
low ratings, regardless of their
actual levels of performance.
Halo error - occurs when a rater
allows either a single attribute
or an overall impression of an
individual to affect the ratings

5. that she makes on each relevant
job dimension.
Proximity errors - occur when a
rating made on one dimension
affects the rating made on the
dimension that immediately
follows it on the rating scale.
Contrast Errors - performance
rating one person receives can
be influenced by the
performance of a previously
evaluated person (Bravo &
Kravitz, 1996).
Assimilation - a type of rating
error in which raters base their
rating of an employee during
one rating period on the ratings
the rater gave during a previous
period.
Sampling Problems
Recency effect - recent behaviors are
given more weight in the performance
evaluation than behaviors that occurred
during the first few months of the
evaluation period.
Infrequent observation - the idea that
supervisors do not see most of an
employee’s behavior.
Step 8: Communicate Appraisal Results to
Employees
Fundamental attribution error - to
attribute others’ failure or poor
performance to personal rather than
situational factors.
Step 9: Terminate Employees
Employment-at-will doctrine - the opinion of
courts in most states that employers have the
right to hire and fire an employee at will and
without any specific cause.
Legal Reasons for Terminating Employees
A. Probationary Period
B. Violation of Company Rules
Progressive discipline - providing
employees with punishments of
increasing severity, as needed, in order
to change behavior.
C. Inability to Perform
D. Reduction in Force (Layoff)
Step 10: Monitor the Legality and Fairness of the
Appraisal System
Behaviorally Anchored Rating Scales - BARS use
critical incidents (samples of behavior) to
formally provide meaning to the numbers on a
rating scale.
Creating BARS
*Generation of Job Dimensions
*Generation of Critical Incidents
*Sorting Incidents
Forced-Choice Rating Scales - scales use critical
incidents and relevant job behaviors, as do
BARS, but the scale points are hidden.
*used only when the major goal of the
performance appraisal system is accurate
employee evaluation for purposes such as
promotion and salary increases.
CHAPTER 8: DESIGNING AND EVALUATING
TRAINING SYSTEMS
Training – a planned effort by an organization to
facilitate the learning of job-related behavior on
the part of its employees.
1. Determining Training Needs
Needs analysis - the process of determining the
training needs of an organization.
Organizational analysis - the process of
determining the organizational factors
that will either facilitate or inhibit
training effectiveness.
*A properly conducted organizational
analysis will focus on the goals the
organization wants to achieve, the extent

6. to which training will help achieve those
goals, the organization’s ability to
conduct training (e.g., finances, physical
space, time), and the extent to which
employees are willing and able to be
trained (e.g., ability, commitment,
motivation, stress)
(McCabe, 2001).
Task Analysis - if the results of the
organizational analysis indicate that a
positive organizational climate for
training exists, the next step is to
conduct a task analysis.
Person analysis - The process of
identifying the employees who need
training and determining the areas in
which each individual employee needs
to be trained.
2. Establishing Goals and Objectives
3. Choosing the Best Training Method
Case study - training technique in which
employees, usually in a group, are
presented with a real or hypothetical
workplace problem and are asked to
propose the best solution.
Living case - a case study based on a
real situation rather than a hypothetical
one.
Simulation - an exercise designed to
place an applicant in a situation that is
similar to the one that will be
encountered on the job.
Role-play - a training technique in which
employees act out simulated roles.
Behavior modeling – a training
technique in which employees observe
correct behavior, practice that behavior,
and then receive feedback about their
performance.
4. Delivering the Training Program
Interactive video - a training technique
in which an employee is presented with
a videotaped situation and is asked to
respond to the situation and then
receives feedback based on the
response.
Programmed instruction - training
method in which employees learn
information at their own pace.
SYNCHRONOUS DISTANCE LEARNING
Webinar - short for “web seminar,” an
interactive training method in which
training is transmitted over the Internet.
Webcast – a non-interactive training
method in which the trainer transmits
training information over the Internet.
Blog – a website in which the host
regularly posts commentaries on a topic
that readers can respond to.
Wiki – a collection of web pages in
which users can create web pages on a
topic and readers can freely edit those
pages.
Listserv – a program that automatically
distributes e-mail messages to a group
of people who have a common interest.
Job rotation – a system in which
employees are given the opportunity to
perform several different jobs in an
organization.
Cross-training - teaching employees
how to perform tasks traditionally
performed by other employees.
Apprentice training – a training
program, usually found in the craft and
building trades, in which employees
combine formal coursework with formal
on-the-job training.
Coaching - is another popular method
of training new employees and typically

7. takes one of two forms: experienced
employees working with new employees
and professional coaches who work with
all employees.
Pass-through programs – a formal
method of coaching in which excellent
employees spend a period of time in the
training department learning training
techniques and training employees.
5. Motivating Employees to Learn
During Training
Skill-based pay Compensating - an
employee who participates in a training
program designed to increase a
particular job-related skill.
Transfer of training – the extent to which
behavior learned in training will be
performed on the job.
Overlearning - practicing a task even
after it has been mastered in order to
retain learning.
Employee reactions – a method of
evaluating training in which employees
are asked their opinions of a training
program.
Employee learning – evaluating the
effectiveness of a training program by
measuring how much employees
learned from it.
Application of training – measurement
of the effectiveness of training by
determining the extent to which
employees apply the material taught in
a training program.
Business impact – a method of
evaluating the effectiveness of training
by determining whether the goals of the
training were met.
Return on investment
(ROI) - the amount of money an
organization makes after subtracting the
cost of training or other interventions.
CHAPTER 9: EMPLOYEE MOTIVATION