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Selection System and Performance-Based pay implementationTRANSCRIPT
2009 Divergent Consulting Inc.
Proposal for Selection System and Performance-Based Pay Implementation for the Department of Child and Family
Welfare
Divergent Consulting Inc.• Previous clients include:
Allstate Insurance CompanySylvan Learning SystemsU.S. Army Research Institute Walt Disney World CompanyWalter Reed Army Institute of Research
We deal with issues such as poor performance, turnover, and dysfunctional leadership
We develop strategies to address organizational weaknesses and measure outcomes of training and incentive programs to evaluate costs and benefits
High success rate with past clients We will assist DCF in attaining a healthy and high
performing workforce
DCF’s Current Concerns
High turnover rate (around 300%) of field workers
DCF would like to implement:
A selection system to reduce turnoverA stress management program to reduce
turnoverA new pay scale to reduce turnover
What will be discussed Selection Systems
Selection Criteria Selection Methods Criteria and Stress
Probationary Period OverviewRecommendation for a New Selection System
Stress and Stress ManagementAdvantages and Disadvantages of Stress Management Programs
Pay PlansPay-For-Performance SystemsAdvantages and Disadvantages of Variable and Merit Pay PlansPerformance Appraisal OverviewRecommendations for Stress Management and Pay System
Proposal
Selection Systems
“You can teach a turkey to climb a tree, but it’s easier to hire a squirrel”
- Lyle Spencer
Problem: Don’t know the applicant’s job performanceSolution: Predict applicant’s job performance
DCF ‘s current selection system
o Is the current method the most effective system for choosing field workers?
Selection Criteria- GMA
Predictive
• Applicants most likely to learn and to perform well on the job
• Predict performance in most jobs 26%
Advantages
• Cost effective
• Not influenced by faking
Disadvantages
GMA Tests1. Single measure tests
2. Tests that measure abilities and GMA
• Group differences adverse impact
• Best Predictor of:1. Job performance 2. Gaining job knowledge on the
job 3. Performance in job training
programs
• Good predictor of task performance
Selection Criteria- Personality
Big Five
• Most assess Big Five
Occupational Personality Scales
o Integrity, drug and alcohol, stress tolerance, customer service
•Criterion-focused Occupational Personality Scales
Personality Tests
Big FiveNeuroticismInsecurity, indecisiveness, anxietyConscientiousnessAmbitious, practical, persistentExtraversion Assertiveness, boldness, sociabilityOpenness to experienceImaginative, original, independence AgreeablenessAltruism, trustworthiness, cooperation
Best predictors Also predict behaviors that GMA cannot
Selection Criteria and Stress
- Personality traits relate to stress
• More stressful events and distress
• Maladaptive ways of coping
High Neuroticism
• More stressful and more pleasurable events
• Active coping strategies
High Extraversio
n
• Active problem solving • Refrain from maladaptive
coping
High Conscientious
ness
Stress Tolera
nce Scales1. Predict handling
work pressures well
2. Identify
job applicant
s who are not tense and
anxious
Not good predictor
s of stress
tolerance criteria
Good predictors of job
performance
Good predictor
s of counter
-producti
ve behavio
rs
Tap into conscientiousness, agreeableness, and emotional stability
Can stress be measured??
Selection Criteria- Job Experience
0-5 years of experience predicts about 11% of job performance
•New hires in 1-5 year range predicts performance well for about first 3 years on the job
Younger and less trained employees more likely to turnover
Is it Necessary???
Selection Methods - Interviews
Applicant learns more about the job and organization develops realistic expectations
Interviewers information on empathy, personal initiative, and applied social skills
UnstructuredNo fixed format or set of questionsSame interviewer often asks different questionsNo fixed procedure for scoring
Structured (best kind)Exact opposite of unstructured interviews Questions determined by job analysisMore valid
Interviews99% of
organizations use some form of
interview
Interviews Cont. Interview Questions
• Candidates asked what they would do in hypothetical situation
• Describe what they did in past jobs as it relates to requirements of the job
• Candidates describe, document, or demonstrate their job knowledge
• Focus on work experience, education, and other qualifications
Situational Behavioral
Job knowledge
Background
Interviews Cont.
AdvantagesDisadvantag
es
Probationary Periods
Popular in US Organizations
Good for Unionized Firms
Protect from bad hiring
choices
Workers discharged
typically have no recourse to
union grievance
procedures
Other Advantages
Helps organizations
obtain the kind of workers they
want
Get information not available before hiring
•Workers can be laid off before firms have invested heavily in them
•Probation higher net returns than monitoring workers on intermittent basis
Helps attract applicants with desirable qualities
Recommendations for a New Selection System
• Disparate treatment or impact could occur if more than one
One applicant pool and one selection
system
• Will have relevant job knowledge, skills, and abilities
2 or more years Social Work
experience or degree in Social
Work
• Single measure of GMA• Purchase TestGMA Test
• Personality test that measures Big Five
• Purchase testPersonality Test
Recommendations Cont.
• Assess applicants’ experience and job knowledge
• Assess applicant’s stress tolerance, or behavior
Structured Interview with
Behavior-Based Questions
• Regardless of academic background or prior experience, new hires should: (1) Be aware of organization’s policies, culture, and mission (2) understand the goals and requirements of their work area and (3) use specific areas of knowledge, skills, and attitudes to do their jobs
• Permanent position and benefits if completed successfully
Probationary Period and On-the-
Job Training
Stress Overview
• Stress responsestresso
r or deman
d
stress respon
se
distress or
strain
Stress
Direct costs- turnover, absenteeism, health care, compensation awards
Job stress estimated to cost the American industry $150 billion dollars annually
Indirect costs- poor morale, job dissatisfaction, poor performance
Stress Cont.Level Purpose Technique
Primary •Modify or eliminate sources of stress that happen in work environment
•Redesign tasks or job•Redesign work environment•Flexible work schedules
Secondary •Improve stress management skills
•Help deal with stressors coming from the work environment that cannot be changed
•Help deal with stress that is non-work related
•Stress management programs to teach:o Relaxation techniqueso Cognitive coping skills o Work/lifestyle modification
skills, such as time management
Tertiary •Reduce the employee’s distress
•Typically done through counseling programs
Stress Management Programs
Advantages
• Cost effective• Up to 75% decrease in
sickness and accident cost• 200% to 800% ROI
• Reduced absenteeism• Up to 14% decline in
absenteeism • Up to 60% reduction in 1
year• Decreased job tension and
stress • Many programs
• Increased satisfaction• Many programs
Disadvantages
• Most conducted at secondary and tertiary levels• Insufficient• Complement with
primary level programs• Optional participation
attracts "worried well" versus extremely distressed
Pay Plan Overview Seniority-Based Systems
Turnover of high performers
Protect average and poor performers
Performance must meet only a minimum standard
Merit Plans
Group Incentive Plans
Piece rates, Bonuses, Commissions
Profit sharing, Gain sharing, Bonuses
•Focus on individual’s levels of performance•Added to base salary
•Work group, facility, organization performance•Added to base salary
•Individual’s performance
•Reward not added to the base salary
•Group’s performance
•Not added to the base salary
Variable Pay Plans
•Purpose: Motivate performance Recognize differential employee
contributions
Pay-for-Performance Systems
Variable Pay Plans1. Success rate =
HIGH2. Organizational performance =
INCREASED3. Productivity =
INCREASED5. Costs = LOWER
6. Absenteeism and turnover = LOWER
7. Employee attitudes = MORE
FAVORABLE8. Payouts = LARGER and FREQUENT
1. Poorly designed system = FAILURE2. If the hurdle for
achieving payout is too high =
employee GIVES UP3. If payout
achievement too easy= NO
BEHAVIOR CHANGE4. Employees can neglect aspects of job not covered in performance goals5. Less motivation for employee to change behavior
Advantages
Disadvantages
Merit Pay Plans1. Outstanding
performers= HIGHER PAY LEVEL
2. Works with unionized employees3. Salary growth = CUMULATIVE and
LONG TERM4. Employee job
satisfaction = HIGH5. Perceptions pay
and performance link = HIGH
6. Pay and performance = BETTER LINK
1. Performance appraisal
objectives= LESS SPECIFIC
2. Objectives seen as less doable and not
linked to performance
3. Pay increases smaller and viewed as less meaningful
4. Adding pay increases into base
salaries may weaken the pay for
performance link 5. Intrinsic
motivation = DECREASED
Advantages
Disadvantages
Performance Appraisal
2 main goals:Accurately assess level
of individual’s job performance
Evaluation system to advance operational functions
o 1. All employees evaluatedo 2. All key job-related responsibilities measuredo 3. All measures relate to job performanceo 4. Performance measurement includes only matters
under employee’s controlo 5. Employees give their own performance evaluations 6. Discussion of performance
Between superior and subordinate before
To be successful:
Recommendations for Stress Management and Pay System
• To reduce stress, we recommend that a stress management workshop is offered to employees
• Areas to be covered determined once current employees surveyed concerning what causes them distress
Stress Management
• We recommend that DCF implement a merit pay system because:
• Used for many different groups of employees
• Establish a better link between pay and performance
Pay System
• Develop a performance appraisal system whereby supervisors evaluate employees’ performance to tie in performance with pay
Performance Appraisal
Proposal Data Collection and Planning
GMAWonderlic Personnel Test (WPT)High construct validity and reliability test-retest reliabilities of .82 to .94
PersonalityNEO Personality Inventory-RevisedTest-retest reliabilities over a six month period ranging from .86 to .91
InterviewAssess stress tolerance, past experience, and job knowledgeStructured and ask behaviorally-based questionsInterviewers will attend trainingDevelop questions based off of competencies identified through job analysis
Selection System
Supervisors Position Analysis Questionnaire (PAQ) Five field workers workshop to describe the work that they do in their jobs Job Analysis
Data Collection and Planning Cont.TrainersField workers who are high performers with good interpersonal skills
Training ProgramSMEs develop content and structure
Trainer Training• Prepare their trainee• Present the training• Ask for a response from their trainee• Provide feedback to their trainee• Evaluate their trainee’s performance
EvaluationTrainees self-report evaluation of his or her learning progressTrainer observe trainee and rate their performance
Probationary Training Period
Data Collection and Planning Cont.Employee Survey- All current field workers- 10-15 minutes and 1 week to complete- Results analyzed and presented to management- The consultant will work with SMEs to design workshopWorkshop - Interactive lectures and role playing concerning:- Recognizing and understanding stress - Stress reduction techniques
- Workshop is optional and offered on Tuesdays after the workday - Eight weeks- One hour long
Workshop Leader- The workshop will be led by a supervisor from DCF- Trained on stress process, coping strategies, managing the stressors identified in survey, and stress reduction techniques
Stress Management
Workshop
Data Collection and Planning Cont.Joint EffortSupervisors and field workers involved in development Performance AreasSMEs will determine important tasks employee must be able to perform well and other dimensions important for success
Rater Training - Interactive lectures and videos on: - How system will work - Tasks and dimensions to be rated - How to accurately rate and observe - Discussion of types of rating errors and brainstorming on how to avoid them - Trainees will rate behaviors presented on videotape and identify similar behaviors in the workplace
Pay-for-Performance
Plan
Implementation and Evaluation Interviewer, Rater, On-the-Job Trainer Training
Selection System- Implementation
Pre-testQuestionnaire on knowledge and abilities of the training material
Post-test
• t-test will be used to compare the tests and determine if there is a difference between scoresScreening
• Conducted on the phone
• Applicants given 12 minutes
• Score 20 or above
NEO-PI-R
• About30-45 minutes to complete
• Score high on conscientiousness and low on neuroticism
•A multiple hurdle approach will be used
Wonderlic Test
Implementation and Evaluation Cont.
test
Measure overall
turnover rate and job performance
before implementat
ion
Measure turnover rates and
job performance
of new employees six months
after implementat
ion
Measure turnover rates and
job performance
of new employees
after another six
months
Selection System- Evaluation
1. Compare rates across different times
2. Assess the utility of the system- Cost Benefits Analysis Cost of
selection system
Job Performance
Implementation and Evaluation Cont.
On-the-Job Training
1. Effectiveness of training
2. Evaluate employee’s performance
3. Return on investment of the training
Training
Post-test1. Reaction to the
training2. Knowledge, skills, abilities, tasks, and
behaviors learned while in training
3 months
6 months 1 year
Cost of the trainin
g
Monetary
benefits
Implementation and Evaluation Cont.
Stress Management Workshop- Evaluation
Performance Appraisal- ImplementationAs soon as they are designed and all raters have
successfully completed training
Performance Appraisal- Evaluation
1. Employee’s perceptions of fairness of the process and their satisfaction with the process
Before Workshop1. Assess
employee’s stress levels
2. Assess effectiveness of
coping skills
After workshop
1. Assess stress levels
2. Assess effectiveness of
coping skills
Performance Appraisal
Conducted by manager
After Performance Appraisal
Employees fill out a questionnaire
Implementation and Evaluation Cont.
Pay Plan- Evaluation
1. Assess if pay practice follows pay policy
• Stronger the correlation between merit increases and performance ratings stronger the link between pay and performance
2. Assess employees’ satisfaction and fairness perceptions
3. Assess the utility of the system
Correlation
Pay Performance
Before Implementation
Questionnaire
After Implementation
Questionnaire
Current revenue
and expensesRevenue
and expenses after the plan has paid out
Timeline
Selection System
about 2 months
Purchasing tests, developing interview
questions, training interviewers, pre-
evaluation measures
On-the-Job Trainingabout 2 ½
months
2 weeks to select trainers, 2 weeks to train trainers, pre-tests, developing training content
Job analysis about 2 months
PAQ Group meetings
Stress Workshopabout 2 ½ months
Stress survey, pre-tests, creating
workshop content, training leaders
Performance Appraisal
about 3 months
Collecting data on job, developing
performance standards, creating rating scales, rater
trainingPay Plan about 1 month
pre-tests, how to use system, developing
monetary amounts, budget analysis
Timeline Cont.
• With the total estimated time of implementation being approximately 14 months, Divergent Consulting Inc. will be able to finish these projects within the allotted time of two years.
Timeline
Data Collection
Development Implementation
Total
Job Analysis 2 months 2 months
Selection System
2 weeks 2 weeks 1 month 2 months
On-the-Job Training
2 weeks 1 month 1 month 2 ½ months
Stress Workshop
2 weeks 1 month 1 month 2 ½ months
Performance Appraisal
1 month 1 month 1 month 3 months
Pay Plan 1 month 1 month
Evaluation #1 1 month
14 months
Fees and Expenses
• Consultant’s fee: $100 per hour If DCF needs additional legal support than we have previously allotted,
the following charges will apply:Data Analysis- $45 per hour Deposition- $ 175 per hour Witness Stand- $200 per hour
PAQ Costs: $39.00 each
Wonderlic Personnel Test Package $1925
Test Booklets (500) Answer Sheets (500)
NEO-PI-R Test Booklets (Reusable) Form S (10): $102.95 NEO PI-R Manual: $106.95 NEO PI-R Profile Forms(25): $102.95 Answer Sheets(25): $102.95
Fees and Expenses Cont.
On-the-job training development, performance appraisal development, interviewer training, on-the-job trainer training, and rater training Meeting of Managers (subject matter experts): Duty included in
manager salary Manager Training:
Trainer fee: $150 per session 2 for interview training 3 for on-the-job training 4 for performance appraisal
Manager: Duty included in manager salary Stress Workshop
Meeting of managers (subject matter experts): Duty included in manager salary
Manager training: Trainer fee: $150 per session
3 sessions Manager: Duty included in manager salary Lecture Materials: $1500 for DCF’s use Workbooks: $10 per workbook Manager compensation: $150 per session
Cost of Project
Cost Hours Units
Other Needs Total
Consultant $100/hr 20 per week
a$104,000
PAQ $39 per unit b70 $2,430
Wonderlic $19.25 per 500
c500
$1,925
NEO-PI-R $14.90 per unit
c500
$106.95 for manual
$7,565.25
Interview $4,000 d$4,000
On-the-Job Training $3,500 d$3,500
Stress Workshop $150 per session
160 sessions
e500
$10 per workbook
$1500 for lecture$30,500
Performance Appraisal $4500 d$4,500
Training: Interviewer $150 per session
2 sessions
f140
$42,000
Training: On-the-Job Trainer
$150 per session
3 sessions
g250
$112,500
Training: WS Leader $150 per session
3 sessions
b70 $31,500
Training: Rater $150 per session
4 sessions
b70 $42,000
Evaluation h5 $7500
Total Cost $394,220.00
a Assumption: 20 hours per week for one year b Assumption: 1 manager per county office c Assumption: 500 units initially ordered d Assumption: Total cost for data collection and design e Assumption: About 500 employees will participate f Assumption: 2 managers per county office g Assumption: About 250 field workers will need to be trained h Assumption: Evaluation of selection system, on-the-job
training, stress workshop, performance appraisal, and pay plan
Cost of Project Table- Assumptions
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