Applied Psychology in Human Resource Management (7th Edition) PDF

 Seventh Edition Applied Psychology in Human Resource Management Wayne F. Cascio The Business School University of Colorado Denver Herman Aguinis...

 Seventh Edition Applied Psychology in Human Resource Management Wayne F. Cascio The Business School University of Colorado Denver Herman Aguinis Kelley School of Business Indiana University Prentice Hall Boston Columbus Indianapolis New York San Francisco Upper Saddle River Amsterdam Cape Town Dubai London Madrid Milan Munich Paris Montreal Toronto Delhi Mexico City Sao Paulo Sydney Hong Kong Seoul Singapore Taipei Tokyo  To my Mother and Dad Whose generosity and self-sacrifice enabled me to have what they did not —WC To my wife, Heidi, and my daughters Hannah Miriam and Naomi Rebecca, whose patience, love, and support have made this book possible —HA Editorial Director: Sally Yagan Cover Designer: Bruce Kenselaar Editor in Chief: Eric Svendsen Cover Art: Getty Images, Inc. Acquisitions Editor: Jennifer M. 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This publication is protected by Copyright, and permission should be obtained from the publisher prior to any prohibited reproduction, storage in a retrieval system, or transmission in any form or by any means, electronic, mechanical, photocopying, recording, or likewise. To obtain permission(s) to use material from this work, please submit a written request to Pearson Education, Inc., Permissions Department, Prentice Hall, One Lake Street, Upper Saddle River, NJ 07458. Many of the designations by manufacturers and seller to distinguish their products are claimed as trademarks. Where those designations appear in this book, and the publisher was aware of a trademark claim, the designations have been printed in initial caps or all caps. Library of Congress Cataloging-in-Publication Data Cascio, Wayne F. Applied psychology in human resource management/Wayne F. Cascio, Herman Aguinis. p. cm. Includes bibligraphical references and index. ISBN-13: 978-0-13-609095-3 ISBN-10: 0-13-609095-8 1. Personal management––Psychological aspects. 2. Psychology, Industrial. 3. Personnel management–– United States. 4. Psychological, Industrial––United States. I. Aguinis, Herman, 1966– II. Title HF5549.C297 2011 658.3001'9––dc22 2009043551 10 9 8 7 6 5 4 3 2 1 ISBN 10: 0-13-609095-8 ISBN 13: 978-0-13-609095-3  CONTENTS Preface xvii Chapter 1 Organizations, Work, and Applied Psychology 1 At a Glance 1 The Pervasiveness of Organizations 1 Differences in Jobs 2 Differences in Performance 2 A Utopian Ideal 3 Point of View 3 Personnel Psychology in Perspective 3 The Changing Nature of Product and Service Markets 5 Effects of Technology on Organizations and People 6 Changes in the Structure and Design of Organizations 6 The Changing Role of the Manager 7 The Empowered Worker—No Passing Fad 8 Implications for Organizations and Their People 9 Plan of the Book 10 왎 Evidence-Based Implications for Practice 12 Discussion Questions 12 Chapter 2 The Law and Human Resource Management 13 At a Glance 13 The Legal System 14 Unfair Discrimination: What Is It? 16 Legal Framework for Civil Rights Requirements 17 The U.S. Constitution—Thirteenth and Fourteenth Amendments 18 The Civil Rights Acts of 1866 and 1871 18 Equal Pay for Equal Work Regardless of Sex 18 Equal Pay Act of 1963 18 Equal Pay for Jobs of Comparable Worth 19 Equal Employment Opportunity 19 Title VII of the Civil Rights Act of 1964 19 Nondiscrimination on the Basis of Race, Color, Religion, Sex, or National Origin 20 Apprenticeship Programs, Retaliation, and Employment Advertising 20 Suspension of Government Contracts and Back-Pay Awards 21 Bona Fide Occupational Qualifications 21 Seniority Systems 21 Preemployment Inquiries 21 Testing 21 iii iv Contents Preferential Treatment 21 Veterans Preference Rights 21 National Security 22 Age Discrimination in Employment Act of 1967 22 The Immigration Reform and Control Act of 1986 23 The Americans with Disabilities Act (ADA) of 1990 23 Enforcement 24 The Civil Rights Act of 1991 25 Monetary Damages and Jury Trials 25 Adverse Impact (Unintentional Discrimination) Cases 25 Protection in Foreign Countries 25 Racial Harassment 26 Challenges to Consent Decrees 26 Mixed-Motive Cases 26 Seniority Systems 26 Race-Norming and Affirmative Action 26 Extension to U.S. Senate and Appointed Officials 26 The Family and Medical Leave Act of 1993 26 Executive Orders 11246, 11375, and 11478 27 Enforcement of Executive Orders 27 The Rehabilitation Act of 1973 28 The Vietnam Era Veterans Readjustment Act of 1974 28 Uniformed Services Employment and Reemployment Rights Act of 1994 28 Enforcement of the Laws—Regulatory Agencies 28 State Fair Employment-Practices Commissions 28 Equal Employment Opportunity Commission 28 The Complaint Process 29 Office of Federal Contract Compliance Programs 29 Goals and Timetables 30 Employment Case Law—General Principles 30 Testing 30 Personal History 32 Sex Discrimination 32 Preventive Actions by Employers 34 Age Discrimination 34 “English Only” Rules—National Origin Discrimination? 35 Seniority 35 Preferential Selection 36 왎 Evidence-Based Implications for Practice 37 Discussion Questions 38  Contents v Chapter 3 People, Decisions, and the Systems Approach 39 At a Glance 39 Utility Theory—A Way of Thinking 39 Organizations as Systems 41 A Systems View of the Employment Process 43 Job Analysis and Job Evaluation 43 Workforce Planning 45 Recruitment 45 Initial Screening 46 Selection 46 Training and Development 47 Performance Management 48 Organizational Exit 48 왎 Evidence-Based Implications for Practice 49 Discussion Questions 50 Chapter 4 Criteria: Concepts, Measurement, and Evaluation 51 At a Glance 51 Definition 52 Job Performance as a Criterion 54 Dimensionality of Criteria 54 Static Dimensionality 54 Dynamic or Temporal Dimensionality 56 Individual Dimensionality 58 Challenges in Criterion Development 59 Challenge #1: Job Performance (Un)Reliability 59 Challenge #2: Job Performance Observation 60 Challenge #3: Dimensionality of Job Performance 61 Performance and Situational Characteristics 61 Environmental and Organizational Characteristics 62 Environmental Safety 62 Lifespace Variables 62 Job and Location 62 Extraindividual Differences and Sales Performance 63 Leadership 63 Steps in Criterion Development 63 Evaluating Criteria 63 Relevance 64 Sensitivity or Discriminability 64 Practicality 64 Criterion Deficiency 65 Criterion Contamination 65 Bias Due to Knowledge of Predictor Information 66 vi Contents Bias Due to Group Membership 66 Bias in Ratings 66 Criterion Equivalence 67 Composite Criterion Versus Multiple Criteria 67 Composite Criterion 67 Multiple Criteria 68 Differing Assumptions 68 Resolving the Dilemma 69 Research Design and Criterion Theory 69 왎 Evidence-Based Implications for Practice 71 Discussion Questions 72 Chapter 5 Performance Management 73 At a Glance 73 Purposes Served 74 Realities of Performance Management Systems 75 Barriers to Implementing Effective Performance Management Systems 75 Organizational Barriers 75 Political Barriers 76 Interpersonal Barriers 76 Fundamental Requirements of Successful Performance Management Systems 76 Behavioral Basis for Performance Appraisal 77 Who Shall Rate? 79 Immediate Supervisor 79 Peers 79 Subordinates 80 Self 81 Clients Served 82 Appraising Performance: Individual Versus Group Tasks 82 Agreement and Equivalence of Ratings Across Sources 83 Judgmental Biases in Rating 85 Leniency and Severity 85 Central Tendency 86 Halo 86 Types of Performance Measures 87 Objective Measures 87 Subjective Measures 87 Rating Systems: Relative and Absolute 88 Relative Rating Systems (Employee Comparisons) 88 Absolute Rating Systems 89 Summary Comments on Rating Formats and Rating Process 95  Contents vii Factors Affecting Subjective Appraisals 96 Evaluating the Performance of Teams 99 Rater Training 101 The Social and Interpersonal Context of Performance Management Systems 102 Performance Feedback: Appraisal and Goal-Setting Interviews 104 Communicate Frequently 105 Get Training in Appraisal 105 Judge Your Own Performance First 105 Encourage Subordinate Preparation 106 Use “Priming” Information 106 Warm Up and Encourage Participation 106 Judge Performance, Not Personality or Self-Concept 106 Be Specific 106 Be an Active Listener 107 Avoid Destructive Criticism and Threats to the Employee’s Ego 107 Set Mutually Agreeable and Formal Goals 107 Continue to Communicate and Assess Progress Toward Goals Regularly 108 Make Organizational Rewards Contingent on Performance 108 왎 Evidence-Based Implications for Practice 108 Discussion Questions 109 Chapter 6 Measuring and Interpreting Individual Differences 110 At a Glance 110 What Is Measurement? 111 Scales of Measurement 111 Nominal Scales 112 Ordinal Scales 112 Interval Scales 113 Ratio Scales 114 Scales Used in Psychological Measurement 114 Consideration of Social Utility in the Evaluation of Psychological Measurement 115 Selecting and Creating the Right Measure 115 Steps for Selecting and Creating Tests 116 Selecting an Appropriate Test: Test-Classification Methods 118 Further Considerations in Selecting a Test 120 Reliability as Consistency 121 Estimation of Reliability 121 Test–Retest 122 Parallel (or Alternate) Forms 123 viii Contents Internal Consistency 124 Stability and Equivalence 127 Interrater Reliability 128 Summary 129 Interpretation of Reliability 130 Range of Individual Differences 130 Difficulty of the Measurement Procedure 131 Size and Representativeness of Sample 131 Standard Error of Measurement 131 Scale Coarseness 132 Generalizability Theory 134 Interpreting the Results of Measurement Procedures 135 왎 Evidence-Based Implications for Practice 138 Discussion Questions 138 Chapter 7 Validation and Use of Individual-Differences Measures 139 At a Glance 139 Relationship between Reliability and Validity 139 Evidence of Validity 141 Content-Related Evidence 142 Criterion-Related Evidence 145 Predictive Studies 146 Concurrent Studies 148 Requirements of Criterion Measures in Predictive and Concurrent Studies 149 Factors Affecting the Size of Obtained Validity Coefficients 149 Range Enhancement 149 Range Restriction 150 Position in the Employment Process 153 Form of the Predictor-Criterion Relationship 153 Construct-Related Evidence 153 Illustration 156 Cross-Validation 157 Gathering Validity Evidence When Local Validation Is Not Feasible 158 Synthetic Validity 159 Test Transportability 159 Validity Generalization 160 Empirical Bayes Analysis 165 Application of Alternative Validation Strategies: Illustration 165 왎 Evidence-Based Implications for Practice 166 Discussion Questions 166  Contents ix Chapter 8 Fairness in Employment Decisions 167 At a Glance 167 Assessing Differential Validity 168 Differential Validity and Adverse Impact 169 Differential Validity: The Evidence 173 Assessing Differential Prediction and Moderator Variables 174 Differential Prediction: The Evidence 176 Problems in Testing for Differential Prediction 177 Suggestions for Improving the Accuracy of Slope-based Differential Prediction Assessment 179 Further Considerations Regarding Adverse Impact, Differential Validity, and Differential Prediction 180 Minimizing Adverse Impact Through Test-Score Banding 184 Fairness and the Interpersonal Context of Employment Testing 189 Fair Employment and Public Policy 190 왎 Evidence-Based Implications for Practice 191 Discussion Questions 192 Chapter 9 Analyzing Jobs and Work 193 At a Glance 193 Terminology 195 Aligning Method with Purpose 196 Choices 196 Defining the Job 197 Job Specifications 197 Establishing Minimum Qualifications 199 Reliability and Validity of Job-Analysis Information 200 Obtaining Job Information 201 Direct Observation and Job Performance 202 Interview 205 SME Panels 205 Questionnaires 206 The Position Analysis Questionnaire 206 Fleishman Job Analysis Survey (F-JAS) 208 Critical Incidents 209 Other Sources of Job Information and Job-Analysis Methods 210 The Job Analysis Wizard 211 Incorporating Personality Dimensions into Job Analysis 211 Strategic or Future-Oriented Job Analyses 212 Competency Models 213 x Contents Interrelationships among Jobs, Occupational Groups, and Business Segments 213 Occupational Information—From the Dictionary of Occupational Titles to the O*Net 214 왎 Evidence-Based Implications for Practice 216 Discussion Questions 216 Chapter 10 Strategic Workforce Planning 217 At a Glance 217 What Is Workforce Planning? 218 Strategic Business and Workforce Plans 219 An Alternative Approach 220 Payoffs from Strategic Planning 221 Relationship of HR Strategy to Business Strategy 222 Talent Inventory 224 Information Type 224 Uses 225 Forecasting Workforce Supply and Demand 225 External Workforce Supply 225 Internal Workforce Supply 226 Leadership-Succession Planning 226 Chief Executive Officer (CEO) Succession 228 Workforce Demand 229 Pivotal Jobs 229 Assessing Future Workforce Demand 230 How Accurate Must Demand Forecasts Be? 230 Integrating Supply and Demand Forecasts 230 Matching Forecast Results to Action Plans 230 Control and Evaluation 232 Monitoring Performance 232 Identifying an Appropriate Strategy for Evaluation 233 Responsibility for Workforce Planning 233 왎 Evidence-Based Implications for Practice 234 Discussion Questions 234 Chapter 11 Recruitment 235 At a Glance 235 Recruitment Planning 237 Staffing Requirements and Cost Analyses 239 Source Analysis 241 Operations 242 External Sources for Recruiting Applicants 242 Managing Recruiting Operations 245  Contents xi Measurement, Evaluation, and Control 247 Job Search from the Applicant’s Perspective 248 Realistic Job Previews 249 왎 Evidence-Based Implications for Practice 252 Discussion Questions 252 Chapter 12 Selection Methods: Part I 253 At a Glance 253 Recommendations and Reference Checks 253 Personal History Data 255 Weighted Application Blanks (WABs) 256 Biographical Information Blanks (BIBs) 256 Response Distortion in Application Forms and Biographical Data 257 Validity of Application Forms and Biographical Data 259 Bias and Adverse Impact 260 What Do Biodata Mean? 260 Honesty Tests 261 Evaluation of Training and Experience 263 Computer-Based Screening 264 Drug Screening 265 Polygraph Tests 267 Employment Interviews 268 Response Distortion in the Interview 268 Reliability and Validity 269 Factors Affecting the Decision-Making Process 270 Social/Interpersonal Factors 270 Cognitive Factors 271 Individual Differences 273 Effects of Structure 275 Use of Alternative Media 278 Needed Improvements 278 Toward the Future: Virtual-Reality Screening (VRT) 280 왎 Evidence-Based Implications for Practice 280 Discussion Questions 281 Chapter 13 Selection Methods: Part II 282 At a Glance 282 Criteria of Managerial Success 283 The Importance of Context 284 Instruments of Prediction 285 Cognitive Ability Tests 285 Objective Personality Inventories 287 xii Contents Leadership-Ability Tests 291 Projective Techniques 293 Motivation to Manage 293 Personal-History Data 297 Peer Assessment 297 Work Samples of Managerial Performance 298 Leaderless Group Discussion (LGD) 300 The In-Basket Test 300 The Business Game 302 Situational Judgment Tests (SJT) 302 Assessment Centers (AC) 303 Assessment Center: The Beginnings 304 Level and Purpose of Assessment 305 Duration and Size 305 Assessors and Their Training 306 Performance Feedback 307 Reliability of the Assessment Process 307 Validity 308 Fairness and Adverse Impact 309 Assessment Center Utility 309 Potential Problems 310 Combining Predictors 311 왎 Evidence-Based Implications for Practice 313 Discussion Questions 314 Chapter 14 Decision Making for Selection 315 At a Glance 315 Personnel Selection in Perspective 315 Classical Approach to Personnel Selection 316 Efficiency of Linear Models in Job-Success Prediction 318 Unit Weighting 318 Suppressor Variables 319 Data-Combination Strategies 320 Effectiveness of Alternative Data-Combination Strategies 321 Alternative Prediction Models 322 Multiple-Regression Approach 322 Multiple-Cutoff Approach 323 Multiple-Hurdle Approach 326 Extending the Classical Validity Approach to Selection Decisions: Decision-Theory Approach 328 The Selection Ratio 328  Contents xiii The Base Rate 330 Utility Considerations 331 Evaluation of the Decision-Theory Approach 331 Speaking the Language of Business: Utility Analysis 332 The Naylor–Shine Model 333 The Brogden–Cronbach–Gleser Model 334 Further Developments of the Brogden–Cronbach–Gleser Model 335 Application of the Brogden–Cronbach–Gleser Model and the Need to Scrutinize Utility Estimates 337 The Strategic Context of Personnel Selection 341 왎 Evidence-Based Implications for Practice 342 Discussion Questions 342 Chapter 15 Training and Development: Considerations in Design 343 At a Glance 343 Training Design 345 Characteristics of Effective Training 345 Additional Determinants of Effective Training 346 Fundamental Requirements of Sound Training Practice 346 Defining What Is to Be Learned 349 The Training and Development Subsystem 349 Assessing Training Needs 350 Organization Analysis 351 Demographic Analysis 351 Operations Analysis 351 Person Analysis 353 Individual Development Plans (IDPs) 353 Training Objectives 353 Creating an Optimal Environment for Training and Learning 354 Team Training 355 Theoretical Models to Guide Training and Development Efforts 357 Trainability and Individual Differences 357 Principles that Enhance Learning 358 Knowledge of Results (Feedback) 358 Transfer of Training 359 Self-Regulation to Maintain Changes in Behavior 360 Adaptive Guidance 361 Reinforcement 361 Practice 362 Active Practice 362 Overlearning 362 xiv Contents Length of the Practice Session 362 Motivation 363 Goal Setting 364 Behavior Modeling 365 왎 Evidence-Based Implications for Practice 366 Discussion Questions 367 Chapter 16 Training and Development: Implementation and the Measurement of Outcomes 368 At a Glance 368 Computer-Based Training 370 Selection of Technique 371 Measuring Training and Development Outcomes 371 Why Measure Training Outcomes? 372 Essential Elements for Measuring Training Outcomes 372 Criteria 373 Additional Considerations in Measuring the Outcomes of Training 375 Strategies for Measuring the Outcomes of Training in Terms of Financial Impact 376 Influencing Managerial Decisions with Program-Evaluation Data 378 Classical Experimental Design 379 Design A 381 Design B 381 Design C 382 Design D 382 Limitations of Experimental Designs 384 Quasi-Experimental Designs 385 Design E 386 Design F 387 Design G 388 Design H 388 Statistical, Practical, and Theoretical Significance 389 Logical Analysis 390 왎 Evidence-Based Implications for Practice 391 Discussion Questions 391 Chapter 17 International Dimensions of Applied Psychology 392 At a Glance 392 Globalization, Culture, and Psychological Measurement 392 Globalization and Culture 393 Country-Level Cultural Differences 394  Contents xv The Globalization of Psychological Measurement 396 Transporting Psychological Measures across Cultures 396 Terminology 397 Identification of Potential for International Management 397 Selection for International Assignments 399 General Mental Ability 399 Personality 400 Other Characteristics Related to Success in International Assignments 401 Cross-cultural Training 403 Performance Management 405 Performance Criteria 405 Repatriation 408 Planning 408 Career Management 409 Compensation 409 왎 Evidence-Based Implications for Practice 409 Discussion Questions 410 Chapter 18 Organizational Responsibility and Ethical Issues in Human Resource Management 411 At a Glance 411 Organizational Responsibility: Definition and General Framework 412 Organizational Responsibility: Benefits 414 Organizational Responsibility: Implementation and the Role of HRM Research and Practice 416 Employee Privacy 419 Safeguarding Employee Privacy 420 Fair Information Practice in the Information Age 421 Employee Searches and Other Workplace Investigations 422 Testing and Evaluation 423 Obligations to One’s Profession 424 Obligations to Those Who Are Evaluated 425 Obligations to Employers 426 Individual Differences Serving as Antecedents of Ethical Behavior 427 Ethical Issues in Organizational Research 428 Ethical Issues at the Research-Planning Stage 428 Ethical Issues in Recruiting and Selecting Research Participants 429 Ethical Issues in Conducting Research: Protecting Research Participants’ Rights 429 Ethical Issues in Reporting Research Results 431 xvi Contents Strategies for Addressing Ethical Issues in Organizational Research 432 Science, Advocacy, and Values in Organizational Research 434 왎 Evidence-Based Implications for Practice 436 Discussion Questions 436 Appendix A Scientific and Legal Guidelines on Employee Selection Procedures—Checklists for Compliance 437 Scientific Guidelines—Summary Checklist 437 Sources of Validity Evidence 437 Choice of Predictors 438 Choice of Participants 438 Data Analysis for Criterion-Related Validity 439 Generalizing Validity Evidence 440 Fairness and Bias 441 Operational Considerations 441 Requirements 441 Communicating the Effectiveness of Selection Procedures 443 Appropriate Use of Selection Procedures 443 Legal Guidelines on Employee Selection Procedures 445 1. Adverse Impact 445 2. Validation 446 3. Criterion-Related Validity 447 4. Content Validity 449 5. Construct Validity 450 6. Validity Generalization 450 7. Application 451 Appendix B An Overview of Correlation and Linear Regression 453 The Concept of Correlation 453 The Concept of Regression 454 Making Predictions Based on Multiple Predictors 457 Predictive Accuracy of Multiple Regression 459 Appendix C Decision Trees for Statistical Methods 461 References 464 Subject Index 517 Author Index 522  PREFACE NEW TO THIS EDITION In preparing this seventh edition, we reviewed a total of 5,881 journal articles and extracted 826 from the following 21 journals: Academy of Management Journal, Academy of Management Review, Human Performance, International Journal of Selection and Assessment, Journal of Applied Psychology, Journal of Vocational Behavior, Organizational Behavior and Human Performance, Organizational Research Methods, Personnel Psychology, American Psychologist, Annual Review of Psychology, Human Relations, Human Resource Management, Journal of Management, Journal of Occupational and Organizational Psychology, Journal of Organizational Behavior, European Journal of Psychological Assessment, European Journal of Work and Organizational Psychology, Academy of Management Executive/AOM Perspectives, HRMagazine, Harvard Business Review, and the APA Handbook of I/O Psychology. After completing the revision, we deleted a total of 174 citations from the sixth edition and added 546 to the seventh, including many from the popular press. Reflecting these additions in content, the new edition is 6.8 percent longer than the last. Before we get to the new features in each chapter, however, there are two cross-chapter issues that we want you to know about. One, we incorporated a new feature into every chapter, namely “Evidence-Based Implications for Practice.” Second, relative to previous editions, we reversed the order of Chapters 13 (“Decision Making for Selection”) and 14 (“Managerial Selection”). We relabeled Chapter 14 as “Decision Making for Selection” and Chapter 12 as “Selection Methods: Part I.” So the order is now: Chapter 12—“Selection Methods: Part I,” Chapter 13—“Selection Methods: Part II,” and Chapter 14—“Decision Making for Selection.” Here is a chapter-by-chapter rundown of some new features. Chapter 1 Considered the impact of outsourcing on product and service markets, as well as on the people who produce those products and services Emphasized that high technology cannot substitute for skill in managing the people who use the high technology Used Accenture’s innovative approach in training a globally dispersed workforce to illustrate the need for compre- hensive training policies that focus on organizational needs three to five years out Chapter 2 Highlighted the difference in approach between the former Immigration and Naturalization Service (imposition of civil fines on employers who hired illegal aliens) and today’s Immigration and Customs Enforcement (ICE, which relies heav- ily on criminal prosecutions and the seizure of company assets) to gain compliance with the nation’s immigration laws Explained a key requirement of the ADA Amendments Act, effective January 1, 2009, to identify a qualified individual Updated preventive actions employers can take to avoid sexual harassment charges, in light of recent court rulings and research Offered practical guidance to employers about implementing “English-only” rules Chapter 3 Three basic ideas provide the foundation of this chapter, and they have not changed: utility theory, which insists that costs and expected consequences of decisions always be taken into account; open-systems theory, which regards organ- izations as open systems in continual interaction with multiple, dynamic environments; and the employment process as a network of sequential, interdependent decisions Chapter 4 Introduced the concept of in situ performance, that is, specification of the broad range of effects—situational, con- textual, strategic, and environmental—that may affect individual, team, or organizational performance Chapter 5 Provided examples of the implementation of performance management systems in actual organizations, such as Microsoft Corporation xvii xviii Preface Emphasized the importance of context (i.e., organizational, cultural, interpersonal relationships) in the performance- management process. This helps students to understand that performance management is both a technical/measurement and an interpersonal/emotional issue Chapter 6 Developed a decision tree for choosing an appropriate process for developing parallel-form tests Discussed scale coarseness, its relationship to measurement error, and its detrimental impact on resulting correlation coefficients (i.e., lack of measurement precision) Chapter 7 Provided step-by-step recommendations on how to conduct a content validation study that follows the best scientific guidelines and is legally defensible Included updates regarding meta-analysis, validity generalization, and synthetic validity Described an empirical, Bayes-analysis approach to validation Chapter 8 Challenged the established conclusion that test bias does not exist, and, if it does exist, it favors minority-group members Distinguished between the social concept of test fairness and the psychometric concept of test bias Presented a procedure for anticipating consequences in terms of selection errors and adverse impact when using a particular test with a particular sample Expanded recommendations to minimize adverse impact Chapter 9 Added new information about strategies for assessing the content-oriented validity of minimum qualifications for education and experience Incorporated the latest information about the use of frame-of-reference training in personality- based job analysis Added recent applications of the O*Net database of occupational information to forecast three different types of adult literacy (which may be more critical than education in determining wages) Chapter 10 Revised the treatment of strategic planning Added a new model that shows the relationship of HR strategy to the broader strategy of a business Provided new information about IBM’s technology-powered staff-deployment tool called “Workforce Management Initiative” Completely revised and updated the section on leadership-succession planning, with in-depth treatment of 3M Company as an example Completely revised the treatment of CEO succession Completely revised the treatment of workforce-demand forecasting Provided guidelines to help assess when “buying” talent is more effective than “making” it Chapter 11 Added a comprehensive, multistage model of the recruitment process Included the latest findings with respect to planning, managing, and evaluating recruitment operations, especially with respect to new technology and Internet-based recruitment Described the ingenious methods that Whirlpool and IBM use to attract MBAs Updated findings regarding realistic job previews and job search from the applicant’s perspective Chapter 12 Offered guidance on conducting telephone-based reference checks Included alternative ways to measure integrity, such as conditional reasoning and situational-judgment tests  Preface xix Addressed the equivalence of face-to-face versus videotaped interviews Presented the latest research regarding the effects of type of interview and interviewee’s personality and other char- acteristics on an interviewer’s hiring recommendation Chapter 13 Extensively revised sections on cognitive-ability testing and personality, including a discussion of new ways to measure personality (e.g., conditional reasoning), techniques for addressing faking in self-report personality tests, and newly proposed personality constructs, such as core self-evaluations Presented the latest research regarding race-based differences in various types of tests used for managerial selection (e.g., work samples and situational-judgment tests) Chapter 14 Discussed the implications of a multiple-hurdle approach for criterion-related validity estimation Presented revised guidelines for setting cutoff scores Chapter 15 Described technology-driven instruction (Web, PDA, or MP3 player) that has made training economically feasible to provide to individuals outside an organization’s own employees (e.g., to customers and suppliers) Presented current findings on team-based training, such as Crew Resource Management training Included transfer-of-training research findings that apply to individuals and teams Described research on self-regulation to maintain changes in behavior over time Addressed the side effects of goal setting Included new findings regarding the mechanism that seems to drive behavior modeling, as well as more precise statements about the effects of behavior modeling Chapter 16 Illustrated the effects of time on transfer to the job and the perceived applicability of training Considered the advantages and disadvantages of ROI Presented a comprehensive framework for influencing managerial decisions with program-evaluation data Discussed the upward bias in effect sizes when single-group, pretest–posttest evaluation designs are used to assess training outcomes Added a new, quasi-experimental research design, the nonequivalent dependent variable design, along with its advantages and disadvantages Chapter 17 Completely revised and updated the treatment of the effects of globalization and technology on organizations and people Updated the treatment of culture and of Hofstede’s work on country-level cultural differences Included current findings regarding international validity generalization for general mental ability and personality as predictors of success in overseas assignments Incorporated both quantitative (meta-analytic) and qualitative reviews of the effects of cross-cultural training on a variety of outcomes Identified key differences between performance management in domestic and international contexts, and provided research-based guidelines for its implementation Updated the treatment of three key aspects of repatriation: planning, career management, and compensation Chapter 18 Expanded this chapter to include the broader area of organizational responsibility, which subsumes ethical issues Described the role of HRM researchers and practitioners in organizational responsibility, including directions for future research and practice xx Preface Like its first six editions, this book is an interdisciplinary-oriented, research-based HR text. As in the past, our subject matter is personnel psychology—the application of psychological research and theory to human resource management (HRM) in organizations. As an applied area of psychology, personnel psychology seeks to make organizations more effec- tive and more satisfying as places to work. Personnel psychology represents the overlap between psychology and HRM. It is a subfield within HRM, excluding, for example, such topics as labor law, compensation and benefits, safety, and industrial relations. Personnel psychology is also a subfield along with industrial and organizational (I/O) psychology—the study of the behavior of men and women in work settings. Today, with the tremendous growth of I/O psychology in many directions, HRM is appropriately considered only one of many areas to which I/O psychologists have turned their attention. As in the first six editions, we have included material of a decidedly theoretical, statistical, or psychometric nature. No doubt some readers will criticize the book on these grounds and charge that “things just aren’t done that way in the real world.” Perhaps not, for we agree that some of the ideas in the book are used by very few organizations. However, many topics in earlier editions that may have seemed “far out” are now considered “mainstream”—for example, validity generalization, statistical power analysis, and situational interviews. The book is designed to be forward looking and progressive, and, even though some of the material is presented in a conventional manner, with a dose of statistical, psychometric, or psychological theory thrown in, we believe that, in the last analysis, nothing is more practical. In writing this book, we make two assumptions about our readers: (1) They are familiar with the general problems of HRM or I/O psychology, and (2) they have some background in fundamental statistics—at least enough to understand statistical procedures on a conceptual level, and preferably enough to compute and interpret tests of statistical significance. As in earlier editions, our goals are (1) to challenge the field to advance rather than simply to document past practice, (2) to present a model toward which professionals should aim, and (3) to present scientific procedure and fundamental theory so that the serious student can develop a solid foundation on which to build a broad base of knowledge. Our overall objective is to integrate psychological theory with tools and methods that will enable the student or pro- fessional to translate theory into practice effectively. We are well aware that in the complex, dynamic environment in which we live and work, scientific and technological advances are occurring faster than ever before. Hence, education must be a lifelong effort if one is to avoid what Armer (1970) calls the “Paul Principle”: Over time, people become uned- ucated and therefore incompetent to perform at a level at which they once performed adequately. If the book projects this one message, then the HR profession will be enriched immeasurably. The response to the first six editions of this book in psychology departments and in business and professional schools has been particularly gratifying. However, new ideas and research findings in all the areas covered by the book made a seventh edition necessary in order to reflect the state of the art in personnel psychology. We have tried to do just that, as reflected in the new content, and we have added many new references. We would be remiss if we did not acknowledge the moral support and encouragement of our families throughout the project. Their love and devotion make good times better and bad times a little easier to take. Wayne Cascio Denver, Colorado Herman Aguinis Bloomington, Indiana  C H A P T E R 1 Organizations, Work, and Applied Psychology At a Glance Organizations are all around us—businesses, hospitals, political parties, government and nongovern- ment organizations, social clubs, churches, Boy and Girl Scouts, and Little Leagues, just to name a few. Each organization has its own particular set of objectives, and, in order to function effectively, each organization must subdivide its overall objectives into various jobs. Jobs differ in their requirements. Likewise, people differ in aptitudes, abilities, and interests, and along many other dimensions. Faced with such variability in people and jobs, programs for the efficient use of human resources are essential. As we move further into the Information Age, job security (the belief that one will retain employment with the same organization until retirement) has become less important to workers than employment security (having the kinds of skills that employers in the labor market are willing to pay for). Hence, workplace train- ing and development activities will be top priorities for organizations and their people. Demographic changes in society will make recruitment and staffing key considerations for many organizations. Diversity at work will be a major theme as the composition of the workforce changes. Guided by the fundamental assumption that in a free society every individual has a basic and inalienable right to compete for any job for which he or she is qualified, we turn to a consideration of how applied psychology can contribute to a wiser, more humane use of our human resources. If present technological, social, and economic indicators predict future concerns, applied psychology will play an increasingly significant role in the world of work in the twenty-first century. THE PERVASIVENESS OF ORGANIZATIONS Throughout the course of our lives, each of us is deeply touched by organizations of one form or another. In the normal course of events, a child will be exposed to a school organization, a church or a religious organization, and perhaps a Little League or a Boy or Girl Scout organization, as well as the social organization of the local community. After leaving the school organization, the young person may choose to join a military, business, or government organization, and as his or her career unfolds, the person probably will move across several different organizations. The point is simply that our everyday lives are inseparably intertwined with organizational member- ships of one form or another. What common characteristics unite these various activities under the collective label “organ- ization”? The question is not an easy one to answer. Many different definitions of organization have 1 2 Chapter 1 Organizations, Work, and Applied Psychology Raw Materials Energy Inputs to Organizations Information Capital People FIGURE 1-1 Inputs to organizations. been suggested, and each definition reflects the background and theoretical point of view of its author with respect to what is relevant and/or important. Yet certain fundamental elements recur in these definitions. In general, an organization is a collection of people working together in a division of labor to achieve a common purpose (Hitt, Miller, & Collela, 2009). Another useful concept views an organization as a system of inputs, throughputs, and outputs. Inputs (raw materials) are imported from the outside environment, transformed or modified (e.g., every day tons of steel are molded into automobile bodies), and finally exported or sold back into the environment as outputs (finished products). Although there are many inputs to organizations (energy, raw materials, information, etc.), people are the basic ingredients of all organizations, and social relationships are the cohesive bonds that tie them together (see Figure 1-1). This book is about people as members and resources of organizations and about what applied psychology can contribute toward helping organizations make the wisest, most humane use of human resources. Personnel psychology, a subfield of applied psychology, is concerned with individual differences in behavior and job performance and with methods for measuring and predicting such differences. In the following sections, we will consider some of the sources of these differences. Differences in Jobs In examining the world of work, one is immediately awed by the vast array of goods and services that have been and are being produced as a result of organized effort. This great variety ranges from the manufacture of tangible products—such as food, automobiles, plastics, paper, textiles, and glassware—to the provision of less tangible services—such as legal counsel, health care, police and fire protection, and education. Thousands of jobs are part of our work-a-day world, and the variety of task and human requirements necessary to carry out this work is staggering. Faced with such variability in jobs and their requirements on the one hand, and with people and their individual patterns of values, aspirations, interests, and abilities on the other, programs for the efficient use of human resources are essential. Differences in Performance People represent substantial investments by firms—as is immediately evident when one stops to consider the costs of recruiting, selecting, placing, and training as many people as there are orga- nizational roles to fill. But psychology’s first law is that people are different. People differ in  Chapter 1 Organizations, Work, and Applied Psychology 3 size, weight, and other physical dimensions, as well as in aptitudes, abilities, personality, inter- ests, and a myriad of other psychological dimensions. People also differ greatly in the extent to which they are willing and able to commit their energies and resources to the attainment of orga- nizational objectives. If we observe a group of individuals doing the same kind of work, it will soon be evident that some are more effective workers than others. For example, if we observe a group of carpenters building cabinets, we will notice that some work faster than others, make fewer mistakes than others, and seem to enjoy their work more than others. These observations pose a question of psychological interest: Why? That is, what “people differences” cause these “work differences”? Perhaps these variations in effectiveness are due to differences in abili- ties. Some of the carpenters may be stronger, have keener eyesight, and have more finely developed motor coordination than others. Perhaps another reason for the observed differences in behavior is motivation. At any given point in time, the strength of forces impelling an indi- vidual to put forth effort on a given task, or to reach a certain goal, may vary drastically. In other words, differences in individual performance on any task, or on any job, could be due to differences in ability, or to differences in motivation, or to both. This has clear implications for the optimal use of individual talents in our society. A Utopian Ideal In an idealized existence, our goal would be to assess each individual’s aptitudes, abilities, personal- ity, and interests; to profile these characteristics; and then to place all individuals in jobs perfectly suited to them and to society. Each individual would make the best and wisest possible use of his or her talents, while in the aggregate, society would be making maximal use of its most precious resource. Alas, this ideal falls far short in practice. The many, and often gross, mismatches between individual capabilities and organizational roles are glaringly obvious even to the most casual observer—history PhDs are driving taxicabs for lack of professional work, and young people full of enthusiasm, drive, and intelligence are placed in monotonous, routine, dead-end jobs. Point of View In any presentation of issues, it is useful to make explicit underlying assumptions. The following assumptions have influenced the presentation of this book: 1. In a free society, every individual, regardless of race, age, gender, disability, religion, national origin, or other characteristics, has a fundamental and inalienable right to compete for any job for which he or she is qualified. 2. Society can and should do a better job of making the wisest and most humane use of its human resources. 3. Individuals working in the field of human resources and managers responsible for making employment decisions must be as technically competent and well informed as possible, since their decisions will materially affect the course of individual livelihoods and lives. Personnel psychology holds considerable potential for improving the caliber of human resource manage- ment (HRM) in organizations. Several recent developments have combined to stimulate this growing awareness. After first describing what personnel psychology is, we will consider the nature of some of these developments. PERSONNEL PSYCHOLOGY IN PERSPECTIVE People have always been subjects of inquiry by psychologists, and the behavior of people at work has been the particular subject matter of industrial and organizational (I/O) psychology. Yet sciences and subdisciplines within sciences are distinguished not so much by the subject matter 4 Chapter 1 Organizations, Work, and Applied Psychology they study as by the questions they ask. Thus, both the social psychologist and the engineering psychologist are concerned with studying people. The engineering psychologist is concerned with the human aspects of the design of tools, machines, work spaces, information systems, and aspects of the work environment. The social psychologist studies power and influence, attitude change, communication in groups, and individual and group social behavior. Personnel psychology is a subfield within I/O psychology. It is an applied discipline that focuses on individual differences in behavior and job performance and on methods of measuring and predicting such differences. Some of the major areas of interest to personnel psychologists include job analysis and job evaluation; recruitment, screening, and selection; training and devel- opment; and performance management. Personnel psychology also represents the overlap between psychology and HRM. HRM is concerned with the management of staffing, retention, development, adjustment, and change in order to achieve both individual and organizational objectives (Cascio, 2010). As a subfield of HRM, personnel psychology excludes, for example, such topics as labor and compensation law, organization theory, industrial medicine, collective bargaining, and employee benefits. Psychologists have already made substantial contributions to the field of HRM; in fact, most of the empirical knowledge available in such areas as motivation, leadership, and staffing is due to their work. Over the past decade, dramatic changes in markets, technology, organizational designs, and the respective roles of managers and workers have inspired renewed emphasis on and interest in personnel psychology (Cascio, 2003a; 2008). The following sections consider each of these in more detail. Figure 1-2 illustrates them graphically. New Organization Designs Technology Changing Product Role Nature of and of Work and Service Workers Organizations Markets Role of Managers FIGURE 1-2 The changing nature of work and organizations.  Chapter 1 Organizations, Work, and Applied Psychology 5 The Changing Nature of Product and Service Markets Globalization, a defining characteristic of economic life in the twenty-first century, refers to commerce without borders, along with the interdependence of business operations in different locations. Indeed, in a world where the transfer of capital, goods, and, increasingly, labor, occurs almost seamlessly, globalization is bringing tremendous changes, both positive and negative, for billions of people around the world. From just-in-time inventories to nanotechnologies, the pace of change is accelerating as a 24/7 culture pervades society. Product and service markets have truly become globalized. To facilitate globalization, some films consider outsourcing. Genpact, Accenture, IBM Services, and similar big outsourcing specialists dispatch teams that meticulously dissect the workflow of an entire department—HR, finance, or information technology department. The team then helps build a new IT platform, redesigns all processes, and administers programs, act- ing as a virtual subsidiary. The contractor then disperses work among global networks of staff ranging from the United States, to Asia, to Eastern Europe (Engardio, 2006). Such structural changes have far-reaching consequences that are beneficial for the global economy but promise more frequent career changes for U.S. workers. Against this backdrop, growing ethnic and regional tensions, coupled with the ever-present threat of terrorism, increase the chances of further geopolitical conflict. Nevertheless, economic interdependence among the world’s countries will continue. Global corporations will continue to be created through mergers and acquisitions of unparalleled scope. These megacorporations will achieve immense economies of scale and compete for goods, capital, and labor on a global basis. As a result, prices will drop, and consumers will have more options than ever (Bhagwati, 2007). The results of accelerated global competition have been almost beyond comprehension— free political debate throughout the former Soviet empire, democratic reforms in Central and South America, the integration of the European community, the North American Free Trade Agreement, and an explosion of free market entrepreneurship in southern China. In short, the free markets and free labor markets that the United States has enjoyed throughout its history have now become a global passion. However, it takes more than trade agreements, technology, capital investment, and infrastruc- ture to deliver world-class products and services. It also takes the skills, ingenuity, and creativity of a competent, well-trained workforce. Workers with the most advanced skills create higher-value products and services and reap the biggest rewards. Attracting, developing, and retaining talent in a culture that supports and nurtures ongoing learning is a continuing challenge for all organizations. Human resource professionals are at the epicenter of that effort. IMPACT ON JOBS AND THE PSYCHOLOGICAL CONTRACT The job churning that character- ized the labor market in the 1990s and early twenty-first century has not let up. If anything, its pace has accelerated (Schwartz, 2009). Both white- and blue-collar jobs aren’t being lost temporarily because of a recession; rather, they are being wiped out permanently as a result of new technology, improved machinery, and new ways of organizing work (Cascio, 2003b; Friedman, 2005, 2008). These changes have had, and will continue to have, dramatic effects on organizations and their people. Corporate downsizing has become entrenched in American culture since the 1980s, but it was not always so. It was not until the final 20 years of the twentieth century that such downsiz- ing and the loss of the perceived “psychological contract” of lifelong employment with a single employer in the public and private sectors of the economy came to characterize many corporate cultures and the American workforce (Cascio, 1993b, 2002). The psychological contract refers to an unwritten agreement in which the employee and employer develop expectations about their mutual relationship (Payne, Culbertson, & Boswell, 2008; Rousseau, 1995). For example, absent just cause, the employee expects not to be terminated involuntarily, and the employer expects the employee to perform to the best of his or her ability. 6 Chapter 1 Organizations, Work, and Applied Psychology Stability and predictability characterized the old psychological contract. In the 1970s, for example, workers held an average of three to four jobs during their working lives. Change and uncertainty, however, are hallmarks of the new psychological contract. Soon workers will hold 7–10 jobs during their working lives. Job-hopping no longer holds the same stigma as it once did. Indeed, the massive downsizing of employees has made job mobility the norm, rather than the exception. This has led workers operating under the new psychological contract to expect more temporary employment relationships. Paternalism on the part of com- panies has given way to self-reliance on the part of employees, and also to a decrease in satisfaction, commitment, intentions to stay, and perceptions of an organization’s trustworthi- ness, honesty, and concern for its employees (Lester, Kickul, Bergmann, & De Meuse, 2003; Osterman, 2009). Indeed, our views of hard work, loyalty, and managing as a career will probably never be the same. Effects of Technology on Organizations and People Millions of workers use networked computers every day, along with other products of the digital age, such as cellular phones, personal digital assistants, and e-mail. Anything digital is border- less, and, therefore, distance means nothing if you have a digital infrastructure (Grove, 2003). The digital revolution is breaking down departmental barriers, enhancing the sharing of vast amounts of information, creating “virtual offices” for workers on the go, collapsing product- development cycles, and changing the ways that organizations service customers and relate to their suppliers and to their employees (King, 2008). To succeed and prosper in a world where nothing is constant except the increasingly rapid pace of change, companies need motivated, technically literate workers who are willing to train continually. There is also a dark side to new technology, as workers may be bombarded with mass junk e-mail (spam), company computer networks may be attacked by hackers who can wreak havoc on the ability of an organization to function, and employees’ privacy may be compromised. One study estimated that an avalanche of spam may be costing companies as much as $874 a year per worker (Baker, 2003). Like other new developments, there are negatives as well as positives associated with new technology, and they need to be acknowledged. A caveat is in order here, however. It relates to the common assumption that since production and service processes have become more sophisticated, high technology can substitute for skill in managing a workforce. Beware of such a “logic trap.” On the contrary, as Lawler and O’Toole (2006) noted, “it takes extremely competent people... to create and deliver the complex services and products that are keys to success in the global economy... (organizations) need to develop systems and practices that attract, retain, and develop skilled, educated, and talented managers... (for) we are at the dawn of the Age of Human Capital” (p. 35). Ideally, therefore, technology will help workers make decisions in organizations that encourage them to do so (Ansberry, 2003b). However, organizations of the future will look very different from organizations of the past, as the next section illustrates. Changes in the Structure and Design of Organizations Many factors are driving change, but none is more important than the rise of Internet technolo- gies. Like the steam engine or the assembly line, the Web has already become an advance with revolutionary consequences, most of which we have only begun to feel. The Web gives everyone in the organization, from the lowliest clerk to the chairman of the board, the ability to access a mind-boggling array of information—instantaneously from anywhere. Instead of seeping out over months or years, ideas can be zapped around the globe in the blink of an eye. That means that twenty-first-century organizations must adapt to management via the Web. They must be predicated on constant change, not stability; organized around networks, not rigid hierarchies; built on shifting partnerships and alliances, not self-sufficiency; and constructed on technologi- cal advantages, not bricks and mortar (Cascio, 2010). Twenty-first-century organizations are  Chapter 1 Organizations, Work, and Applied Psychology 7 global in orientation, and all about speed. They are characterized by terms such as “virtual,” “boundaryless,” and “flexible,” with no guarantees to workers or managers. This approach to organizing is no short-term fad. The fact is that organizations are becoming leaner and leaner, with better and better trained “multispecialists”—those who have in-depth knowledge about a number of different aspects of the business. Eschewing narrow specialists or broad generalists, organizations of the future will come to rely on cross-trained multispecialists in order to get things done. One such group whose role is changing dramatically is that of managers. The Changing Role of the Manager In the traditional hierarchy that once made up most bureaucratic organizations, rules were sim- ple. Managers ruled by command from the top (essentially one-way communication), used rigid controls to ensure that fragmented tasks (grouped into clearly defined jobs) could be coordinated effectively, and partitioned information into neat compartments—departments, units, and func- tions. Information was (and is) power, and, at least in some cases, managers clung to power by hoarding information. This approach to organizing—that is, 3-C logic—was geared to achieve three objectives: stability, predictability, and efficiency. In today’s reengineered, hypercompetitive work environment, the autocratic, top-down command-and-control approach is out of step with the competitive realities that many organiza- tions face. To survive, organizations have to be able to respond quickly to shifting market condi- tions. In this kind of an environment, a key task for all managers, especially top managers, is to articulate a vision of what their organizations stand for, what they are trying to accomplish, and how they compete for business in the marketplace. Managers need to be able to explain and com- municate how their organizations create value. The next step is to translate that value-creation story into everything that is done, including the implications for employee knowledge and behavior, and to use it as a benchmark to assess progress over time. A large and growing number of organizations now recognize that they need to emphasize workplace democracy in order to achieve the vision. This involves breaking down barriers, shar- ing information, using a collaborative approach to problem solving, and orienting employees toward continuous learning and improvement. For many managers, these kinds of skills simply weren’t needed in organizations designed and structured under 3-C logic. Does this imply that we are moving toward a universal model of organizational and lead- ership effectiveness? Hardly. Contingency theories of leadership such as path-goal theory (House & Mitchell, 1974), normative decision theory (Vroom & Yetton, 1973), and LPC contingency theory (Fiedler, 1967) suggest that an autocratic style is appropriate in some situa- tions. In recent years, many organizations (e.g., DuPont, Royal Dutch Shell) have instituted formal information-sharing and workplace-education programs that reduce or eliminate a key condition that makes autocratic leadership appropriate—workers who lack the information or knowledge needed to make meaningful suggestions or decisions. More often, today’s networked, interdependent, culturally diverse organizations require transformational leadership (Avolio et al., 2003; Bass & Riggio, 2006). Leaders who are to transform followers to bring out their creativity, imagination, and best efforts require well-developed interpersonal skills, founded on an understanding of human behavior in organizations. Such strategic leadership is partic- ularly effective under unstable or uncertain conditions (Colbert, Kristof-Brown, Bradley, & Barrick, 2008; Waldman et al., 2001). I/O psychologists are well positioned to help managers develop those kinds of skills. In addition, although by no means universal, much of the work that results in a product, service, or decision is now done in teams—intact, identifiable social systems (even if small or temporary) whose members have the authority to manage their own task and interpersonal processes as they carry out their work. Such teams go by a variety of names—autonomous work groups, process teams, self-managing work teams, and so on (see Figure 1-3). All of this implies a radical reorientation from the traditional view of a manager’s work. 8 Chapter 1 Organizations, Work, and Applied Psychology FIGURE 1-3 Teams are now, and will continue to be, a key feature of organizations. In this kind of an environment, workers are acting more like managers, and managers more like workers. The managerial roles of “controllers,” “planners,” and “inspectors” are being replaced by “coaches,” “facilitators,” and “mentors” (Srivastava, Bartol, & Locke, 2006; Wellins, Byham, & Wilson, 1991). This doesn’t just happen—it requires good interpersonal skills, contin- uous learning, and an organizational culture that supports and encourages both. Flattened hierarchies also mean that there are fewer managers in the first place. The empow- ered worker will be a defining feature of such organizations. The Empowered Worker—No Passing Fad It should be clear by now that we are in the midst of a revolution—a revolution at work. Change isn’t coming only from large, high-profile companies doing high-technology work. It has also permeated unglamorous, low-tech work. As an example, consider Cincinnati-based Cintas Corporation (Box 1-1), which outfits the employees of some of North America’s leading corpo- rations (Cintas Corporation, 2009; Henkoff, 1994; Siehl & Hessell, 1999). Twenty-first-century organizations, both large and small, differ dramatically in structure, design, and demographics from those of even a decade ago. Demographically, they are far more diverse. They comprise more women at all levels; more multiethnic, multicultural workers; older workers; more workers with disabilities; robots; and contingent workers. Paternalism is out; self-reliance is in. There is constant pressure to do more with less and a steady emphasis on  Chapter 1 Organizations, Work, and Applied Psychology 9 BOX 1-1 HRM in Action—Cintas Corporation Cintas doesn’t just hire people to drive trucks, deliver clean uniforms, and pick up dirty ones. Rather, its concept of “customer service representatives” (CSRs) extends much further. They are mini-entrepreneurs who design their own routes, manage their own accounts, and, to a large extent, determine the size of their paychecks. Cintas ties compensation almost entirely to measures of customer satisfaction. Lose a cus- tomer on your watch and your salary sinks. CSR pay is nearly twice the industry average. In practice, Cintas rarely loses a customer; its annual defection rate is less than 1 percent. Employees don’t leave either; turnover is a low 7 percent. To a large extent, this is because Cintas spends considerable time and effort on selecting employees—those who take pride in their work and are exceedingly neat and outgoing. In all, 46 different ethnic groups are represented at Cintas, and its company culture is built on a foundation of high ethical standards, trust, and cooperation. Cintas is the world’s largest supplier of corporate-identity uniforms, with more than 800,000 clients. In addition, it provides a broad range of business solutions, including facility, document-management, and fire-protection services. As of 2009, Fortune magazine named Cintas as one of “World’s Most Admired Companies.” Said CEO Scott Farmer, “Our achieve- ment as a company is testament to the achievement of our Cintas employee-partners who represent our company in the plant and in the field. All are focused on our principal objective: ‘We will exceed our customers’ expectations to maximize the long-term value of Cintas for its shareholders and working partners.’” How has Cintas done? Sales and profits have increased for 39 consecutive years. In a gesture that reflects its strong culture, Cintas has shared more than $176 million with its employee-partners over the past decade. empowerment, cross-training, personal flexibility, self-managed work teams, and continuous learning. Workers today have to be able to adapt to changing circumstances and to be prepared for multiple careers. I/O psychologists are helping to educate prospective, current, and former workers to these new realities. In the future, they will be expected to do much more, as we shall see, but first let’s consider some organizational responses to these new realities. Implications for Organizations and Their People What do these trends imply for the ways that organizations will compete for business? In a world where virtually every factor that affects the production of goods or the delivery of services—capital, equipment, technology, and information—is available to every player in the global economy, the one factor that doesn’t routinely move across national borders is a nation’s workforce. Today the quality of a nation’s workforce is a crucial determinant of its ability to compete and win in world markets. Human resources can be sources of sustained competitive advantage as long as they meet three basic requirements: (1) They add positive economic benefits to the process of producing goods or delivering services; (2) the skills of the workforce are distinguishable from those of competitors (e.g., through education and workplace learning); and (3) such skills are not easily duplicated (Barney, 1991). A human resource system (the set of interrelated processes designed to attract, develop, and maintain human resources) can either enhance or destroy this potential competitive advantage (Lado & Wilson, 1994). Perhaps a quote attributed to Albert Einstein, the famous physicist, best captures the posi- tion of this book. After the first atomic reaction in 1942, Einstein remarked: “Everything has changed, except our way of thinking” (Workplace, 1993, p. 2). As I/O psychology in general, and personnel psychology in particular, moves forward into the twenty-first century, our greatest challenge will be to change the way we think about organizations and their people. The remain- der of this book will help you do that. 10 Chapter 1 Organizations, Work, and Applied Psychology Trends such as these have intensified the demand for comprehensive training policies that focus training efforts on organizational needs three to five years out. Here’s an example: Accenture puts 400 of its most promising managers through a special leadership development program. They are assigned to groups that can include Irish, Chinese, Belgians, and Filipinos, and specialists in fields such as finance, marketing, and technology. Over 10 months, teams meet in different interna- tional locations. As part of the program, they pick a project—developing a new Web page, say—and learn how to tap the company’s worldwide talent pool to complete it (Engardio, 2007). None of this is simple or easily done, and it may take several years to become fully integrated into a business. From the perspective of employees, programs like these are especially valuable because job security (the belief that one will retain employment with the same organization until retirement) has become less important to workers than employment security (having the kinds of skills that employers in the labor market are willing to pay for). Demographic changes in society are making recruitment and staffing top priorities for many organizations. Diversity at work is a major theme as the composition of the workforce changes. Consider, for example, that more than half of the U.S. workforce now consists of racial and ethnic minorities, immigrants, and women. White, native-born males, though still dominant, are themselves a statistical minority. The so-called mainstream is now almost as diverse as the society at large. In short, a diverse workforce is not something a company ought to have; it’s something all companies do have or soon will have. In addition to demographic changes, we are witnessing sweeping changes in the nature of work and its impact on workers and society. The following potential problems could surface (Colvin, 2003; Engardio, 2007; Howard, 1995): Insecurity—ongoing employment downsizing; “offshoring” of skilled jobs in services, such as financial analysis, software design, and tax preparation. Uncertainty—constant change, multiple reporting relationships, inability to forecast the future. Stress—competing demands, long work hours, exhaustion, lack of separation between work and nonwork activities, global competition. Social friction—two-tiered society, sharp differences in opportunities based on ability, insufficient work for the low skilled. On the other hand, work could provide the following compensations: Challenge—endless opportunities for stretching, growing, developing skills, keeping interested. Creativity—opportunities to generate novel solutions to emerging problems, self-expression. Flexibility—individualized careers and person–organization contracts, personal time and space arrangements, multiple careers. Control—empowerment, responsibility for making decisions and directing one’s life. Interrelatedness—global communication and “virtual connectedness,” group and team collaboration, end of isolation. The future world of work will not be a place for the timid, the insecure, or the low skilled. For those who thrive on challenge, responsibility, and risk taking, security will come from seiz- ing opportunities to adapt and to develop new competencies (Gunz & Peiperl, 2007; Hall & Mirvis, 1995). The need for competent HR professionals with broad training in a variety of areas has never been greater. PLAN OF THE BOOK In Chapter 2, we will explore a pivotal issue in HRM today: legal requirements for fair employ- ment practice. In particular, we will emphasize the constitutional basis for civil rights legislation and the judicial interpretation of Title VII of the 1964 Civil Rights Act. The remainder of the book will focus in greater depth on some of the major issues in contemporary personnel psychology.  Chapter 1 Organizations, Work, and Applied Psychology 11 Each chapter will outline the nature of the topic under consideration, survey past practice and research findings, describe present issues and procedures, and, where relevant, indicate future trends and new directions for research. The goal of Chapters 3 through 5 is to provide the reader with a strategy for viewing the employment-decision process and an appreciation of the problems associated with assessing its outcomes. Chapter 3 presents an integrative model in which the major areas of personnel psychology are seen as a network of sequential, interdependent decisions. The model will then provide a structure for the rest of the book, as well as a conceptual framework from which to view the complex process of matching individuals and jobs. In Chapter 4, we will focus on one of the most persistent and critical problems in the field of personnel psychology, that of developing and applying adequate performance criteria. A thorough understanding and appreciation of the criterion problem is essential, for it is relevant to all other areas of HRM, especially to performance management. In Chapter 5, we will examine current methods, issues, and problems associated with the performance-management process, of which performance appraisal is a key component. The objective of performance management is to improve performance at the level of the individ- ual or team every day. The first part of the book presents fundamental concepts in applied measurement that underlie all employment decisions. Chapters 6 and 7 represent the core of personnel psychology—measurement and validation of individual differences. After comparing and contrasting physical and psychological measurement, we will consider the requirements of good measurement (reliability and validity) and the practical interpretation and evaluation of measurement procedures. As a capstone to this part of the text, Chapter 8 is devoted entirely to a consideration of the issue of fairness in employment decisions. Taken together, Chapters 2 through 8 provide a sound basis for a fuller appreciation of the topics covered in the remainder of the book. In order to provide a job-relevant basis for employment decisions, information on jobs, work, and workforce planning is essential. This is the purpose of Chapters 9 and 10. In Chapter 9, we will examine job analysis (the study of the work to be done, the skills needed, and the training required of the individual jobholder). It is the touchstone for all employment decisions. In Chapter 10, we will consider the emerging area of workforce planning. The goal of a workforce-planning system is to anticipate future staffing requirements of an organization and, based on an inventory of present employees, to establish action programs (e.g., in recruitment, training, and career path planning) to prepare individuals for future jobs. The emphasis of the chapter will be on tying current workforce-planning theory to practice. Chapters 11 through 14 are concerned with staffing—specifically, recruitment and selection. In Chapter 11, we consider the theoretical and practical aspects of recruitment, emphasizing both traditional and Web-based strategies. Chapter 12 is the first of two chapters on selection methods. Its particular focus is on nontest techniques such as personal-history data and employment interviews. Chapter 13 is the second chapter on selection methods, with particular emphasis on managerial selection. Chapter 14 demonstrates how material from the previous three chapters can be integrated into alternative strategies for making selection decisions. Chapters 15 and 16 focus on the design, implementation, and evaluation of training and development activities for individuals and teams, colocated as well as virtual. These topics have drawn special attention in HRM, especially in light of the need to develop skills continually in a dynamic business environment. We consider these issues with the conviction that a considerable reservoir of human potential for productivity improvement, among managers as well as nonman- agers, remains to be tapped. The last part of the book comprises Chapters 17 and 18. Chapter 17, “International Dimensions of Applied Psychology,” reflects the increasing role of globalization. Globalization 12 Chapter 1 Organizations, Work, and Applied Psychology Evidence-Based Implications for Practice Organizations are all around us, but over time how we think about them has changed dramatically. Consider just a few such changes. Product and service markets are global, 24/7/365. New, Internet-based organizations are “born global,” and labor markets in every region of the world now compete against each other for foreign direct investment. The result: globally dispersed workforces. The influence of factors such as technology, notably digitization and the Internet, has changed the work and personal lives of millions of people. Given the massive downsizing that has occurred worldwide in the past few years, the stability and predictability of the old psychological contract have given way to uncertainty, change, and the need for self-reliance. The ability to work in teams is more important than ever, but those teams may be spread geographically all over the world. Diversity has been woven into the very fabric of workplaces everywhere, spawning the need for information sharing, tolerance, and cultural understanding in order to prosper. implies more, not less, contact with cultures other than one’s own. Personnel psychology has much to contribute, from identifying international management potential early on to selecting, training, developing, and managing the careers of expatriates. Finally, Chapter 18 addresses a variety of organizational responsibility and ethical issues in HRM. Corporate scandals, including those associated with Enron, Siemens, Worldcom, and Tyco, just to name a few, have called public attention to the crisis in ethics at all levels of organizations (Byrne, 2002; Crawford & Esterl, 2007; Dougherty, 2008). While there are no easy answers to many