© 2014 Cengage Learning

• Title VII of the Civil Rights Act of 1964
• Age Discrimination in Employment Act of 1967
• Equal Pay Act of 1963
• Pregnancy Discrimination Act of 1978
• Americans with Disabilities Act of 1990
• Civil Rights Act of 1991
• Family and Medical Leave Act of 1993

• Title VII of the Civil Rights Act of 1964 as amended in 1991 prohibits discrimination based on color, race, national origin, age, religion, sex, disability, and pregnancy.
• Executive order 11246 and affirmative action as required by the order
• Federal enforcement agencies: EEOC and OFCCP
• Illegal discriminations as defined by the Uniform Guidelines of EEOC:
– Adverse impact, a form of unintentional discrimination that harmed or disadvantaged at substantially lower rates than others.
– Four-fifths rule to determine to determine if adverse impact has occurred.
– Disparate treatment, a form of intentional discrimination which occurs when people, despite being qualified, are intentionally not given the same opportunities as others.

• A plaintiff presents prima-facie evidence for illegal discrimination when filing their complaints.
• The defendant and Burden of proof:
– BFOQ : employee qualifications “reasonably necessary to the normal operation of that particular business.”
– Objective evidence for job-relatedness

• adj., Latin for "at first look," or "on its face," referring to a lawsuit or criminal prosecution in which the evidence before trial is sufficient to prove the case unless there is substantial contradictory evidence presented at trial. A prima facie case presented to a Grand Jury by the prosecution will result in an indictment.
• For example, in a charge of bad check writing, evidence of a half dozen checks written on a non-existent bank account makes it a prima facie case. However, proof that the bank had misprinted the account number on the checks might disprove the prosecution's apparent "open and shut" case
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Recruiting consists of a set of activities that improves the number and quality of people who apply for employment and the pro0bability that qualified compatible applicants will accept employment offers.
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An employer brand is the package of functional, economic, and psychological benefits provided by employment and identified with the company as an employer – namely, a company’s reputation as an employer which creates a clarity about what the company is about and helps potential recruits differentiate the company from a large array of potential employers.

• There are four main activities that support an employer brand:
– Identify and develop positive differentiating features.
– Raise the company’s public profile.
– Use consistent messages in recruiting and marketing.
– Earn third party recognition.
• What is the employer brand of:
– Apple? Google? JP Morgan? Lockheed Martin?
– Wal-Mart? Disney? Enterprise Rent-A-Car?
• Realistic job preview and Employee turnover

• One strategy suggested was to offer a high wage, thereby generating a large pool of applicants, and select only those best suited for the job.
• Simply offering a high wage without any stipulations will encourage too many low-quality applicants to apply for the job, and the personnel office will be flooded a large number of applicants, only a small proportion of whom are suited to the firm’s needs.
• An even worse consequence is that some of the undesirable workers will slip through the screening process and actually get hired, and during the time they work for the firm, they can cause major problems, disrupting output and costing the firm wages not justified by their productivity.

• A number of approaches can help to mitigate the effects of adverse selection that results when the wrong kinds of workers are attracted to the firm because of a particular policy the firm uses.
• There are two approaches that can help to mitigate the problems of adverse selection:
– Contingent compensation schemes
– Probationary periods
• Probationary periods and properly designed pay schemes can generate the appropriate pool of applicants for a firm.

Options for lawn mower blade-sharpeners
Hourly output of blades Hourly wage – Other option
Skilled 6 $20.00
Unskilled 4 $16.00 .
• A company paying blade-sharpeners $3.35 per sharpened blade can effectively weed out unskilled workers and attract only skilled workers.
• Under this piece rate plan:
Skilled workers earn: $20.10 = $3.35 x 6 pieces > $20.00
Unskilled workers earn: $13.40 = $3.35 x 4 pieces > $16.00

• Key to this contingent pay contract is that workers have an accurate assessment of their own output before they start the job. If not, contingent pay schemes do not weed out undesirable workers.
• Both skilled and unskilled workers will apply if they believe they can produce 6 pieces per hour.
• Conversely, any piece rate low enough (e.g., less than $16) to keep out unskilled workers must necessarily keep out skilled workers.

• The validity of selection procedure refers to how well a selection method predicts an applicant’s suitability as an employee.
• Interviewing job candidates is one way to collect information that will help companies select which job applicants they want to join the company.
• Interviews are frequently used in the selection process, but the validity of interviews varies widely.

• Structured interview – a method that asks applicants to recall specific incidents in the past and describe how they handled the situations. A general question is asked, followed by several probe questions asking for more details or a more thorough explanation.
• Multiple interviewers – bringing more than one perspective to a complex problem can improve the quality of the final decision. The individual biases of interviewers tend to cancel each other. Studies suggest that using multiple interviewers using an unstructured interview process provides as valid a result as a patterned behavior description interview.
• Training – train managers to be aware of interviewer biases. While this is only minimally useful, it is better than nothing

• There are two types of error that may occur in selection:
– Type 1 error – when a most suitable applicant is rejected.
– Type 2 error – when an unqualified applicant is accepted.
• The costs of type 1 error
• The costs of type 2 error
• Cost-effective selection standards

• Traditional wage and salary
• Pay for performance
• Piece rate and commissions
• Pay for team performance
– Gain sharing
– Profit sharing

• Employee separation incurs significant costs when it results in a loss of high-performance employees. Why?
– New workers must be found.
– New workers must be trained for firm-specific skills.
– New workers must be integrated into the production process.
• Employee turnover can be either functional or dysfunctional.
• Voluntary turnover (employee quit) and layoffs are two examples of dysfunctional separation.
• Just-in-cause dismissal is an example of functional turnover.

• Empirical studies indicate that when pay is strongly tied to performance via sales commissions and performance-based bonuses, poor performers are much more likely to leave.
• Properly designed pension plans can also reduce voluntary turnover.
• Linking managers’ pay to turnover (layoffs and quit) is recognition of people as a driver of business success and also reflects a recognition that turnover is costly.

• Use of a wage premium helps companies retain highperformance employees.
• Properly designed wage premiums can also lead to high performance, especially when combined with the threat of termination for poor performance.
• High wage policy thus can be one of the efficiency wage policies.

• Layoffs or pay cuts?
• laying off employees and especially those with critical or irreplaceable skills, knowledge, and expertise is in general highly costly.
• Profit-sharing can help to avoid costly layoffs.