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

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

CONTENTS
Preface

xvii

Chapter 1 Organizations, Work, and Applied Psychology

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 WorkerNo Passing Fad 8
Implications for Organizations and Their People 9
Plan of the Book 10
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. ConstitutionThirteenth and Fourteenth Amendments
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

18

Apprenticeship Programs, Retaliation, and Employment

Advertising 20
Suspension of Government Contracts and Back-Pay Awards
Bona Fide Occupational Qualifications 21
Seniority Systems 21
Preemployment Inquiries 21
Testing 21

21

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Preferential Treatment

21

Veterans Preference Rights

National Security

21

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

Protection in Foreign Countries
Racial Harassment

25

25

26

Challenges to Consent Decrees

Mixed-Motive Cases
Seniority Systems

26

26

26

Race-Norming and Affirmative Action

26

Extension to U.S. Senate and Appointed Officials

The Family and Medical Leave Act of 1993

26

Executive Orders 11246, 11375, and 11478

27

Enforcement of Executive Orders

The Rehabilitation Act of 1973

26

27
28

The Vietnam Era Veterans Readjustment Act of 1974

28

Uniformed Services Employment and Reemployment

Rights Act of 1994 28
Enforcement of the LawsRegulatory Agencies

28

State Fair Employment-Practices Commissions

28

Equal Employment Opportunity Commission

The Complaint Process

28

29

Office of Federal Contract Compliance

Programs 29
Goals and Timetables

30

Employment Case LawGeneral Principles

Testing

30

30

Personal History

32

Sex Discrimination

32

Preventive Actions by Employers

Age Discrimination

34

34

"English Only" RulesNational Origin Discrimination?

Seniority 35
Preferential Selection 36
Evidence-Based Implications for Practice 37
Discussion Questions

38

35

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Chapter 3 People, Decisions, and the Systems Approach

39

At a Glance 39
Utility TheoryA 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
Evidence-Based Implications for Practice 49
Discussion Questions

50

Chapter 4 Criteria: Concepts, Measurement, and Evaluation

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
Leadership 63
Steps in Criterion Development
Evaluating Criteria 63
Relevance

63

63

64

Sensitivity or Discriminability
Practicality 64
Criterion Deficiency 65
Criterion Contamination 65

64

Bias Due to Knowledge of Predictor Information

66

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Bias Due to Group Membership 66

Bias in Ratings 66
Criterion Equivalence 67
Composite Criterion Versus Multiple Criteria
Composite Criterion
Multiple Criteria 68
Differing Assumptions

67

67
68

Resolving the Dilemma 69

Research Design and Criterion Theory 69
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
Who Shall Rate? 79
Immediate Supervisor
Peers 79
Subordinates 80
Self 81

77

79

Clients Served 82
Appraising Performance: Individual Versus Group Tasks
Agreement and Equivalence of Ratings Across Sources
Judgmental Biases in Rating 85
Leniency and Severity 85
Central Tendency 86
Halo 86
Types of Performance Measures

82
83

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

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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
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

104

107

Continue to Communicate and Assess Progress

Toward Goals Regularly 108
Make Organizational Rewards Contingent on Performance
Evidence-Based Implications for Practice 108
Discussion Questions

108

109

Chapter 6 Measuring and Interpreting Individual Differences

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
Further Considerations in Selecting a Test 120
Reliability as Consistency 121
Estimation of Reliability 121
Test-Retest 122
Parallel (or Alternate) Forms

123

110

118

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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
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
Evidence-Based Implications for Practice 166
Discussion Questions

166

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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
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
Obtaining Job Information 201
Direct Observation and Job Performance 202
Interview 205
SME Panels 205
Questionnaires 206
The Position Analysis Questionnaire
Fleishman Job Analysis Survey (F-JAS)

200

206
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
Strategic or Future-Oriented Job Analyses 212
Competency Models 213

211

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Interrelationships among Jobs, Occupational Groups,

and Business Segments 213
Occupational InformationFrom the Dictionary
of Occupational Titles to the O*Net 214
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
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

222

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
Responsibility for Workforce Planning 233
Evidence-Based Implications for Practice 234
Discussion Questions

Chapter 11 Recruitment

234

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

233

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Measurement, Evaluation, and Control 247

Job Search from the Applicant's Perspective 248
Realistic Job Previews 249
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
Bias and Adverse Impact

260

What Do Biodata Mean? 260

Honesty Tests 261
Evaluation of Training and Experience
Computer-Based Screening 264
Drug Screening 265
Polygraph Tests 267
Employment Interviews 268

263

Response Distortion in the Interview 268

Reliability and Validity 269
Factors Affecting the Decision-Making Process
Social/Interpersonal Factors
Cognitive Factors 271

270

270

Individual Differences 273

Effects of Structure 275
Use of Alternative Media

278

Needed Improvements 278

Toward the Future: Virtual-Reality Screening (VRT)
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

280

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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
Duration and Size

305

305

Assessors and Their Training

306

Performance Feedback 307

Reliability of the Assessment Process
Validity 308

307

Fairness and Adverse Impact 309

Assessment Center Utility 309
Potential Problems 310
Combining Predictors 311
Evidence-Based Implications for Practice
Discussion Questions

313

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
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

318

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The Base Rate 330

Utility Considerations 331
Eva I uation 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
Evidence-Based Implications for Practice 342
Discussion Questions

342

Chapter 15 Training and Development: Considerations in Design

At a Glance 343
Training Design 345
Characteristics of Effective Training 345
Additional Determinants of Effective Training 346
Fundamental Requirements of Sound Training Practice
* Defining What Is to Be Learned 349
The Training and Development Subsystem 349
Assessing Training Needs 350
Organization Analysis 351
Demographic Analysis 351

343

346

Operations Analysis 351

Person Analysis 353
Individual Development Plans (IDPs) 353
Training Objectives 353
Creating an Optimal Environment for Training and Learning
Team Training 355
Theoretical Models to Guide Training and Development Efforts
Trainability and Individual Differences
Principles that Enhance Learning 358

357

Knowledge of Results (Feedback) 358

Transfer of Training 359
Self-Regulation to Maintain Changes in Behavior
Adaptive Guidance
Reinforcement
Practice

361

362

Active Practice 362

Overlearning 362

361

360

354
357

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Length of the Practice Session 362

Motivation 363
Goal Setting 364
Behavior Modeling 365
Evidence-Based Implications for Practice
Discussion Questions

366

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
Evidence-Based Implications for Practice 391
Discussion Questions

391

Chapter 17 International Dimensions of Applied Psychology

At a Glance 392
Globalization, Culture, and Psychological Measurement
Globalization and Culture 393
Country-Level Cultural Differences 394

392
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The Globalization of Psychological Measurement 396

Transporting Psychological Measures across Cultures 396
Terminology 397
Identification of Potential for International Management
Selection for International Assignments 399
General Mental Ability 399
Personality 400

397

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
Evidence-Based Implications for Practice
Discussion Questions

409

410

Chapter 18 Organizational Responsibility and Ethical Issues

in Human Resource Management 411
At a Glance

411

Organizational Responsibility: Definition and General Framework

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
Testing and Evaluation 423
Obligations to One's Profession 424
Obligations to Those Who Are Evaluated
Obligations to Employers 426

425

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

422

412

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Strategies f o r Addressing Ethical Issues in Organizational
Research 432
Science, Advocacy, and Values in Organizational Research
Evidence-Based Implications for Practice 436
Discussion Questions 436

434

Appendix A Scientific and Legal Guidelines on Employee Selection

ProceduresChecklists for Compliance
437
Scientific GuidelinesSummary Checklist 437
Sources of Validity Evidence
Choice of Predictors 438

437

Choice of Participants 438

Data Analysis for Criterion-Related Validity
Generalizing Validity Evidence 440
Fairness and Bias 441
Operational Considerations
Requirements

439

441

441

Communicating the Effectiveness of Selection Procedures

Appropriate Use of Selection Procedures 443
Legal Guidelines on Employee Selection Procedures
1. Adverse Impact 445
2. Validation 446
3. Criterion-Related Validity
4. Content Validity

443

445

447

449

5. Construct Validity 450

6. Validity Generalization 450
7. Application

451

Appendix B An Overview of Correlation and Linear Regression

The Concept of Correlation 453
The Concept of Regression 454
Making Predictions Based on Multiple Predictors
Predictive Accuracy of Multiple Regression
Appendix C Decision Trees for Statistical Methods
References 464
Subject Index 517
Author Index 522

457

459
461

453