Chapter Seven

Selection Decisions
and Personnel Law

A Brief Review of Selection

Organizations often use Selection
Batteries to make employee hiring
decisions
Selection Batteries:
Set of tests or predictors used for hiring
Predictors developed and selected based
on information from job analysis
Effective batteries predict success better
than the use of any one test

Selection Battery Example

Assessment
Center
Work
Sample

r2 = .25

r2 = .36

Interview

r2 = .10

Criterion
Performance

Test Battery R2 = .55

Considerations for 660 Inc

Selection Battery for middle level managers
What do we do?
JA to generate Job Specs and Job Description
From these, we would generate performance
criteria and predictors

Costs
Both time and $$ are important

Redundancy
If predictors relate too closely, they dont add any
information

Recruitment
Before we can do selection we have to recruit
applicants
The process of encouraging potentially qualified
applicants to seek employment with a particular
company
Affected by the organizations reputation and
organizational values

Efficiency of selection system is limited by

effectiveness of recruitment
Many sources can be utilized:
Newspaper classifieds, Internet (including aesthetic
and usability factors of the organizations website),
newsletters, campus career centers, employee
referrals

Selection Decisions
Weve been talking about validity and
validation since the first week of the
class, so
Selection should be based on valid tests

Two general approaches to

demonstrating the validity of a selection
battery:
Validation Study: Either Predictive or
Concurrent Validation Designs
Validity Generalization

Predictive Validity

The extent to which test scores obtained at

one time predict criteria obtained at some
future time
Steps for a Predictive Validity study:
1. Gather predictor data on all applicants
2. Hire applicants based on predictors not part of
the selection battery
3. Gather performance data to serve as criteria for
validation
4. Compute validity coefficient between predictor
score and criterion score

Concurrent Validity

How well a test predicts a criterion that is

measured at the same time as the test
Often more viable than Predictive Validity studies

Steps for Concurrent Validity study:

1. Collect data on both predictors and criteria from
incumbent employees at same time
2. Compute validity coefficient to assess strength of
relationship between predictor and criterion
scores

Differences Between Concurrent and

Predictive Validity Studies
Concurrent validation uses incumbents
as participants rather than applicants
In concurrent validation, both predictors
and criteria are measured at the same
time

Cross Validation
The same selection battery will likely
demonstrate lower validity when employed
with a different sample validity shrinkage
Therefore, want to cross validate
Calculate predicted score yielded from regression
equations from first validation sample
Correlate predicted score with actual criterion
score for second sample and get the R2
Compare this R2 coefficient to the one from the
original sample, hope for only a small amount of
shrinkage

Validity Generalization
Challenges assumption that validities
are situation specific situational
specificity
Use meta-analytic techniques to weight
and combine validity coefficients across
situations to examine the generalizability
of validity coefficients
Great deal of research has supported
the notion that validities do generalize

VG Hang-ups
Three reasons why VG not totally
accepted:
Many criticisms and concerns about the
statistical methods used in VG
Still limited to jobs which are very similar to
the jobs on which the test was originally
validated
Courts have had some concerns with this
approach, but other times the approach has
held up in court when its done carefully and
a JA was used to show jobs are the same

What can 660 Inc do?

Develop/select Assessment Center,

Work Sample, and Interview
1. Validate the battery using CriterionRelated Strategy (Predictive or
Concurrent) or
2. Do JA to show that our job is the same as
other jobs in which this particular battery
was used and validated, and use VG as
our evidence of a valid selection battery

Practical Approaches to Selection

We can tell our client that we have a
selection battery that will result in
hiring successful Employees, but
they want more than that:
Which applicants will be successful?
A cost-effective selection battery

Two major approaches to selection

that help us here:
Multiple Cutoffs
Multiple Regression

Multiple Cutoff Approach

Non-compensatory model of selection
in which passing scores or cutoffs are
set on each predictor
Applicant must score higher than cutoff on
each predictor

Strength: does not allow candidates

weak in very important areas of the job
to be selected despite other abilities
(e.g., surgical ability)

Multiple Hurdle Approach

Special rendition of multiple cutoff
Predictors administered in a predetermined order ($$) so that only
those who pass a test or hurdle move
on to the next phase of selection
More cost effective as unqualified
applicants efficiently weeded out

Multiple Regression
Statistical technique that allows us to
estimate how well a series of predictors
forecasts performance criterion
Steps:
Validation data used to generate an equation
that indicates the best prediction scheme
Y = bo+b1X1+b2X2+b3X3

Apply prediction scheme to applicant data to

calculate scores that enable us to make
selection decisions

Regression Approach Considerations

May want to set a cutoff on the predicted
criterion that excludes applicants if they fall
below it even if our client needs more
Employees (e.g., score of 11.00)
May still want to set a minimum cutoff on
each predictor (hybrid multi-cutoff/multiregression approach); e.g., Work Sample
score of 4.00
Need to cross-validate the regression
equation

Usefulness of Selection Process

The answer to Is it worth it? often
comes directly from an assessment of
utility
Elements of selection process that allow
us to assess utility:
Decision Accuracy
Validity
Base Rate
Selection Ratio
Cost

Decision Accuracy
4.

1.

Success

Criterion

Hits

Misses

2.

3.

Fail

Correct Rejections
Reject

False Alarms
Hire

Predictor Battery

Decision Accuracy
Decision Accuracy for Hires
percentage of hiring decisions that are
correct
Q1/(Q1+Q3)
surgeons, cops, pilots, etc.

Overall Decision Accuracy maximizing

number of hits and correct rejections
while minimizing misses and false
alarms
(Q1+Q2)/(Q1+Q2+Q3+Q4)

Validity
To the extent that a selection battery is
valid, hits and correct rejections will be
maximized while misses and false
alarms will be minimized
With larger validity coefficients,
predictors do a better job of forecasting
subsequent performance

Base Rate
Percentage of current employees who
are successful on the job
Reflects the quality of previous
selection batteries (as well as PA and
training programs) and provides a basis
of comparison for new battery
Usually the organization sets this cutoff
such as when a school uses a 2.0 GPA

Selection Ratio
Number of job openings divided by
number of applicants
If 20 openings and 20 applicants, then
SR=1.00; If 5 openings for 20
applicants, then SR=.25
The smaller the SR, the greater the
potential utility of a selection battery

Cost
Associated with the development and
implementation of a selection battery
If costs are so high that they are greater
than potential increase in revenue from
hiring better employees, then our client
wont be so interested in the new
battery
Why does NASA spend billions on
selection?? How about FBI?

Calculating Utility
Need 3 pieces of information
Validity of selection battery
Knowledge of organizations Base Rate
Selection Ratio
Can use Taylor-Russell tables that allow for
estimation of improvement in the work
force from a new selection battery

Legal Issues in Industrial Psychology

Prior to the 1960s it was NOT illegal to
discriminate in the hiring of employees
This changed dramatically with the passing of
important Federal Legislation and publication
of important selection guidelines
Civil Rights Act of 1964, specifically Title VII which
also created the EEOC in 1965
1978, EEOC published the Uniform Guidelines on
Employee Selection Procedures
1987, SIOPs Principles for the Validation and Use
of Selection Procedures (revised 2003)

Employment At-Will
Employers and employees have the
right to initiate and terminate the
employment relationship at any time, for
any or no reason at all
However, due to recent employment
cases about wrongful discharge, many
companies have incorporated just
cause discharge policies
Just Cause firing someone for
acceptable reasons

Adverse Impact
Very important concept with regard to
understanding employment law
Rule of Thumb a selection procedure
has an adverse impact against a group
if the selection rate for that group is less
than 80% of the selection rate for the
group with the highest selection rate

Steps in a Discrimination Case

Plaintiff demonstrates a prima facie
case (on the face of it); the numbers
indicate adverse impact
Defendant can argue against statistics
by showing the plaintiff is looking only at
partial data, interpreting it incorrectly, or
looking at the wrong data OR
If Adverse Impact does it exist,
defendant has some options to combat
the charge of illegal discrimination

Combating a Charge of Illegal

Discrimination
Demonstrate that although adverse impact
exists, each test in the selection battery is
job-related for all minority groups and the
majority group
Validation study used to support this

Claim that for some reason, a business

necessity exists such that businesses cannot
be adequately conducted without employees
of a certain type Bona Fide Occupational
Qualification (BFOQ)
Diaz v. Pan Am

Affirmative Action
Practice employed by many organizations to
increase the number of minorities or
protected class members in targeted jobs
Purpose is to address historical
discrimination; not a quota system!
Programs were very popular for many years
and also very controversial (Baake v. CA
Board of Higher Education, 1978)
The University of Michigan - why the different
rulings?

Important Employment Laws

Equal Pay Act (1963)
Civil Rights Act (1964, 1991) - CRA
Age Discrimination in Employment Act
(1967) ADEA
Americans with Disabilities Act (1990)
ADA
Family and Medical Leave Act (1993) FMLA

Equal Pay Act

Illegal to discriminate in pay and
benefits, on the basis of sex, for jobs
that are equal
Disputes in this law arise regarding the
definition of equal work
Courts are clear that there must be
sizable differences in work to support
different pay for men and women
Brennan v. Prince William Hosp Corp, 1974

Civil Rights Act (1964, 1991)

Beginning of legislation in U.S. intended to
decrease discrimination
Amended in 1991 to deal more clearly with
issues of monetary damages and jury trials
as well as clarifying each partys obligations
in adverse impact cases
In general, CRA prohibits employment
discrimination based on race, color, religion,
sex, or national origin
An increase in National Origin discrimination
cases since 9/11

CRA Milestones and Issues

Griggs v. Duke Power (1971)
Court ruled that even though company had
no intention to discriminate, if adverse
impact exists, the company must
demonstrate selection is job-related
Distinguishes Disparate Impact (adverse
impact without intent) from Disparate
Treatment (intentional differential
treatment)

Albermarle Paper v. Moody (1974)

CRA Milestones and Issues

CRA also prohibits discrimination based on
national origin such that no one can be
denied equal employment because of
ancestry, culture, birthplace, etc.
Accent; religion; pregnancy.
Sexual Harassment is prohibited under CRA
Distinguishes between Quid Pro Quo (this for
that) and Hostile Work Environment
Meritor Savings Bank v. Vinson (1986)
Clarence Thomas, 1991

Age Discrimination in
Employment Act (1967)
Protects individual 40 years of age and older from
discrimination with respect to any employment related
decision
Age as a BFOQ sometimes holds up in court (EEOC
v. U. of Texas Health Science Center at San Antonio,
1983)
Age 60 rule
In Discharge cases, Plaintiffs must demonstrate that
they
Are within the protected class
Were doing satisfactory work
Were discharged despite work performance
Were replace by a younger person
Cleverly v. Western Electric, 1979

American with Disabilities Act (1990)

Prohibits discrimination against qualified
individuals with disabilities in
employment decisions
Disability defined as
Having a physical or mental impairment
that substantially limits one or more life
functions
Having a record of such impairment
Regarded as having such an impairment

ADA Continued
Qualified Individuals Those who can
perform the Essential Functions of the job
Essential Functions those tasks that are
significant and meaningful to the job

Employers must make Reasonable

Accommodations for such individuals
Reasonable Accommodations changes in job
function that allow qualified, disabled individuals to
successfully perform job.
Etheridge v. State of Alabama, 1994

ADA Continued
Undue Hardship Employers required only to
make reasonable accommodations to the
extent that such accommodations do not
impose an undue hardship with respect to
difficulty of implementation or expense
Job Analysis very important to define scope of
jobs and determine what kind of
accommodations can be made
Martin v. PGA Tour, 1998; PGA Tour v. Martin,
2000

Family and Medical Leave Act (1993)

Allows eligible employees to take jobprotected, unpaid leave for up to 12 weeks
because of such family-related issues as the
birth of a child, serious health condition of a
family member, or ones own serious health
condition
Created to help employees balance work
pressure with family pressures
Employee has right to return to same position
or equivalent position w/ same pay/benefits