Selection System and Performance-Based pay implementation

1. Proposal for Selection System and Performance-
Based Pay Implementation for the Department of
Child and Family Welfare
2009
Divergent Consulting Inc.

2. Divergent Consulting Inc.
• Previous clients include:
 Allstate Insurance Company
 Sylvan Learning Systems
 U.S. Army Research Institute
 Walt Disney World Company
 Walter 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

3. DCF’s Current Concerns
 High turnover rate (around 300%) of field workers
 DCF would like to implement:
 A selection system to reduce turnover
 A stress management program to reduce turnover
 A new pay scale to reduce turnover

4. What will be discussed
 Selection Systems
 Selection Criteria
 Selection Methods
 Criteria and Stress
 Probationary Period Overview
 Recommendation for a New Selection System
 Stress and Stress Management
 Advantages and Disadvantages of Stress Management Programs
 Pay Plans
 Pay-For-Performance Systems
 Advantages and Disadvantages of Variable and Merit Pay Plans
 Performance Appraisal Overview
 Recommendations for Stress Management and Pay System

5. 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 performance
 Solution: Predict applicant’s job performance
 DCF ‘s current selection system
o Is the current method the most effective system
for choosing field workers?

6. Selection Criteria- GMA
• Best Predictor of:
1. Job performance
2. Gaining job knowledge on the job
3. Performance in job training programs
• Applicants most
• Good predictor of task performance likely to learn
and to perform
Predictiv well on the job
e
• Predict
performance in
most jobs 26%
GMA
1. Tests measure
Single • Cost effective
Advanta
tests ges • Not influenced by
faking
2. Tests that measure
abilities and GMA
• Group
Disadvantag differences 
es adverse impact

7. Selection Criteria- Personality
Big Five
Neuroticism
Insecurity, indecisiveness, anxiety Best predictors
Also predict behaviors that
Conscientiousness
GMA
Ambitious, practical, persistent cannot
Extraversion
Assertiveness, boldness, sociability
Openness to experience
Imaginative, original, independence
Agreeableness
Altruism, trustworthiness, cooperation
• Most assess
Big Big Five
Five
Personalit
Occupatio •Criterion-focused Occupational
y Tests nal Personality Scales
Personality
Scales o Integrity, drug and alcohol, stress
tolerance, customer service

8. Selection Criteria and Stress
- Personality traits relate to stress
• More stressful events and
High distress
Neuroticism • Maladaptive ways of coping
• More stressful and more
High pleasurable events
Extraversion • Active coping strategies
High • Active problem solving
Conscientiousne • Refrain from maladaptive
ss coping

9. Tap into Not good
conscientiousn predictors of
ess, agreeable stress
ness, and tolerance
criteria
emotional
stability
Stress Tolerance
Scales
Good 1. Predict handling
work pressures well Good
predictors of predictors of
counter- 2. Identify job job
productive applicants who are not performance
behaviors tense and anxious

10. 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

11. Selection Methods - Interviews
Applicant
Interviewers
 learns more about the job
 information on empathy,
and organization
personal initiative, and
develops realistic
applied social skills
expectations
Interviews
99% of
organizations use
some form of
interview
Unstructured Structured (best kind)
Exact opposite of unstructured
No fixed format or set of questions
interviews
Same interviewer often asks
Questions determined by job
different questions
analysis
No fixed procedure for scoring
More valid

12. Interviews Cont.
Interview Questions
• Candidates • Describe what
asked what they did in past
they would do jobs as it
in hypothetical relates to
situation requirements
of the job
Situational Behavioral
Backgroun Job
d knowledge
• Focus on work • Candidates
experience, ed describe, docu
ucation, and ment, or
other demonstrate
qualifications their job
knowledge

13. Interviews Cont.
Advantages Disadvantages

14. Probationary Periods
Popular in US Good for
Other Advantages
Organizations Unionized Firms
Get information not
Protect from bad Helps attract
available before hiring
hiring choices applicants with
desirable qualities
•Workers can be laid off
before firms have
invested heavily in them Workers discharged
typically have no Helps organizations
•Probation  higher net recourse to union obtain the kind of
returns than monitoring grievance procedures workers they want
workers on intermittent
basis

15. Recommendations for a New Selection System
One applicant pool and • Disparate treatment or impact
one selection system could occur if more than one
2 or more years Social • Will have relevant job
Work experience or knowledge, skills, and abilities
degree in Social Work
• Single measure of GMA
GMA Test
• Purchase Test
• Personality test that measures
Personality Test Big Five
• Purchase test

16. Recommendations Cont.
• Assess applicants’ experience and job
Structured Interview
knowledge
with Behavior-Based
Questions
• Assess applicant’s stress tolerance, or
behavior
• 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
Probationary Period and their work area and (3) use specific areas
On-the-Job Training of knowledge, skills, and attitudes to do
their jobs
• Permanent position and benefits if
completed successfully

17. Stress Overview
• Stress response
stressor or stress distress or
demand response strain
Stress
Direct costs-
turnover, absenteeism, health
care, compensation awards Indirect costs- poor morale, job
dissatisfaction, poor performance
Job stress estimated to cost the American
industry $150 billion dollars annually

18. Stress Cont.
Level Purpose Technique
Primary •Modify or eliminate sources •Redesign tasks or job
of stress that happen in work •Redesign work environment
environment •Flexible work schedules
Secondary •Improve stress management •Stress management programs
skills to teach:
oRelaxation techniques
•Help deal with stressors coming oCognitive coping skills
from the work environment that oWork/lifestyle modification
cannot be changed skills, such as time management
•Help deal with stress that is
non-work related
Tertiary •Reduce the employee’s •Typically done through
distress counseling programs

19. Stress Management Programs
Advantages Disadvantages
• Cost effective
• Most conducted at secondary
• Up to 75% decrease in sickness
and accident cost and tertiary levels
• 200% to 800% ROI • Insufficient
• Reduced absenteeism • Complement with primary
• Up to 14% decline in absenteeism level programs
• Up to 60% reduction in 1 year
• Decreased job tension and stress • Optional participation attracts
• Many programs "worried well" versus extremely
• Increased satisfaction distressed
• Many programs

20. Pay Plan Overview
Seniority-Based Systems
Turnover of high performers Protect average and poor
performers
Performance must meet only a minimum
standard
Pay-for-Performance
•Purpose:
Systems
Motivate performance
Recognize differential employee Variable Pay
contributions Plans
Piece Profit sharing, Gain
Merit Group Incentive
rates, Bonuses, Commiss
sharing, Bonuses
Plans Plans
ions
•Focus on •Work •Individual’s •Group’s
individual’s group, facility, performance performance
levels of organization
performanc performance •Reward not •Not added to
e •Added to added to the the base salary
•Added to base salary base salary

21. Variable Pay Plans
1. Success rate = HIGH
Advantages 2. Organizational performance =
INCREASED
3. Productivity = INCREASED
5. Costs = LOWER
6. Absenteeism and turnover = LOWER
7. Employee attitudes = MORE
FAVORABLE
8. Payouts = LARGER and FREQUENT
1. Poorly designed system =
FAILURE
2. If the hurdle for achieving
payout is too high = employee
GIVES UP
3. If payout achievement too
easy= NO BEHAVIOR CHANGE
4. Employees can neglect
aspects of job not covered in
performance goals
5. Less motivation for employee

22. Merit Pay Plans
1. Outstanding performers= HIGHER PAY
Advantage LEVEL
2. Works with unionized employees
s 3. Salary growth = CUMULATIVE and LONG
TERM
4. Employee job satisfaction = HIGH
5. 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 Disadvanta

23. Performance Appraisal
2 main
Accurately assess level of goals:
Evaluation system to advance
individual’s job
operational functions
performance
o 1. All employees evaluated
o 2. All key job-related responsibilities measured
o 3. All measures relate to job performance
o 4. Performance measurement includes only matters under
employee’s control
o 5. Employees give their own performance evaluations
6. Discussion of performance
Between superior and subordinate before

24. Recommendations for Stress
Management and Pay System
• To reduce stress, we recommend that a
stress management workshop is offered to
Stress employees
Management • Areas to be covered determined once current
employees surveyed concerning what causes
them distress
• We recommend that DCF implement a merit
pay system because:
Pay System • Used for many different groups of employees
• Establish a better link between pay and
performance
Performance • Develop a performance appraisal system
whereby supervisors evaluate employees’
Appraisal performance to tie in performance with pay

25. Proposal
Data Collection and Planning
Job Supervisors Position Analysis
Analysis Questionnaire (PAQ)
Five field workers  workshop to
describe the work that they do in their
jobs
GMA
Selection
Wonderlic Personnel Test (WPT)
System
High construct validity and reliability test-retest
reliabilities of .82 to .94
Personality
NEO Personality Inventory-Revised
Test-retest reliabilities over a six month period
ranging from .86 to .91 Interview
Assess stress tolerance, past experience, and job
knowledge
Structured and ask behaviorally-based questions
Interviewers will attend training
Develop questions based off of competencies
identified through job analysis

26. Data Collection and Planning Cont.
Probationar
y Training Trainers
Period Field workers who are high performers with
good interpersonal skills
Training Program
SMEs 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
Evaluation
Trainees self-report evaluation of his or her learning
progress
Trainer observe trainee and rate their performance

27. Data Collection and Planning Cont.
Stress
Management
Employee Survey
Workshop
- 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 workshop
Workshop
- 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

28. Data Collection and Planning Cont.
Pay-for-
Performanc
e Plan Joint Effort
Supervisors and field workers involved in
development
Performance Areas
SMEs 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

29. Implementation and Evaluation
 Interviewer, Rater, On-the-Job Trainer Training
Pre-test
Questionnaire on knowledge and Post-test
abilities of the training material
• t-test will be used to compare the tests and determine if there is a difference
between scores
 Selection System- Implementation
Screening NEO-PI-R Interview
Wonderlic
Test • Applicants • About30-45
• Conduct • Structured
given 12 minutes to and
ed on the minutes complete
phone behavior-
• Score 20 • Score high on based
or above conscientious • 2
ness and low interviewer
on s
neuroticism
•A multiple hurdle approach will be used

30. Implementation and Evaluation Cont.
Selection System- Evaluation
1. Compare rates across different
times Measure turnover
Measure turnover
Measure overall rates and job
rates and job
turnover rate and job performance of new
performance of new
performance before employees six
employees after
implementation months after
another six months
implementation
2. Assess the utility of the system- Cost
Benefits Analysis
Cost of selection
system
test
Job
Performance

31. Implementation and Evaluation Cont.
 On-the-Job Training
1. Effectiveness of training Post-test
1. Reaction to the training
Training 2. Knowledge, skills, abilities, tasks, and
behaviors learned while in training
2. Evaluate employee’s performance
3 months 6 months 1 year
3. Return on investment of the training
Cost of the
training
Monetary
benefits

32. Implementation and Evaluation Cont.
 Stress Management Workshop- Evaluation
Before Workshop
After workshop
1. Assess employee’s stress
1. Assess stress levels
levels
2. Assess effectiveness of
2. Assess effectiveness of
coping skills
coping skills
 Performance Appraisal- Implementation
 As 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
After Performance Appraisal
Performance Appraisal
Employees fill out a
Conducted by manager
questionnaire

33. Implementation and Evaluation Cont.
 Pay Plan- Evaluation
1. Assess if pay practice follows pay policy
Correlation
Pay Performanc
e
• Stronger the correlation between merit increases and performance ratings
 stronger the link between pay and performance
2. Assess employees’ satisfaction and fairness perceptions
After Implementation
Before Implementation
Questionnaire
Questionnaire
3. Assess the utility of the system
Current revenue
and expenses
Revenue and
expenses after the
plan has paid out

34. Timeline
Job analysis PAQ
about 2 months Group meetings
Purchasing tests, developing
Selection System interview questions, training
about 2 months interviewers, pre- evaluation
measures
2 weeks to select trainers, 2
On-the-Job Training weeks to train trainers, pre-
about 2 ½ months tests, developing training
content
Stress Workshop Stress survey, pre-
tests, creating workshop
about 2 ½ months content, training leaders
Collecting data on
Performance Appraisal job, developing performance
about 3 months standards, creating rating
scales, rater training
Pay Plan pre-tests, how to use
system, developing monetary
about 1 month amounts, budget analysis

35. Timeline Cont.
Timeline
Data Development Implementation Total
Collection
Job Analysis 2 months 2 months
Selection System 2 weeks 2 weeks 1 month 2 months
On-the-Job 2 weeks 1 month 1 month 2 ½ months
Training
Stress Workshop 2 weeks 1 month 1 month 2 ½ months
Performance 1 month 1 month 1 month 3 months
Appraisal
Pay Plan 1 month 1 month
Evaluation #1 1 month
14 months
• With the total estimated time of implementation being approximately 14
months, Divergent Consulting Inc. will be able to finish these projects within the

36. 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

37. 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

38. Cost of Project
Cost Hours Unit Other Needs Total
s
Consultant $100/hr 20 per a$104,000
week
PAQ $39 per unit b70 $2,430
Wonderlic $19.25 per c500 $1,925
500
NEO-PI-R $14.90 per c500 $106.95 for $7,565.25
unit manual
Interview $4,000 d$4,000
On-the-Job Training $3,500 d$3,500
e500 $10 per workbook
Stress Workshop $150 per 160 $30,500
session session $1500 for lecture
s
Performance Appraisal $4500 d$4,500
Training: Interviewer $150 per 2 f140 $42,000
session session
s
Training: On-the-Job Trainer $150 per 3 g250 $112,500
session session
s

39. Cost of Project Table-
Assumptions
 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
 hAssumption: Evaluation of selection system, on-the-job training, stress
workshop, performance appraisal, and pay plan

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