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Appendix A-41

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backpay award which, while imprecise, was better than no remedy at all, according to the

court. The court also certified the entire class with regard to an Equal Pay Act remedy.

BASED ON WHAT YOU HAVE REVIEWED, WAS WAL-MART GUILTY OF GENDER

DISCRIMINATION AS ALLEGED?

Important issue #1: The role of subjective decision-making.

Wal-Mart’s arguments: A key point in the plaintiffs’ case was that highly subjective decision–

making processes in pay and promotion decisions were susceptible to discrimination. Indeed,

Wal-Mart’s petition to appeal the class certification asserts that “District Courts within the Ninth

Circuit are divided” with regard to such decision-making processes and offers another case,

where certification of the class was denied. In that decision, the high degree of subjectivity was

Plaintiffs’ response: The plaintiffs response is that this district court has argued elsewhere that

local decision-making does not defeat an argument of commonality. Moreover, the plaintiffs

point out that Wal-Mart has a strong degree of centralization, which in turn creates a

Plaintiffs’ response. The plaintiffs cite a different case in the ninth circuit, which they assert

addressed aggregated statistical data. I found another case, in a different area of the country,

where the district court did accept (for class certification purposes) aggregated analyses (e.g.,

Warren v. Xerox, 2004) by the plaintiffs. The plaintiffs also contend that in a class certification

situation, the court’s role is not to make decisions as to which expert’s evidence is correct;

rather, that the purpose is to determine whether the plaintiff’s evidence is “sufficient.” Finally,

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the plaintiffs noted that Wal-Mart actually analyzed pay differences at the store sub-unit, which

they contend resulted in very small sample sizes, making it difficult to find statistical

significance (I could not locate the typical sample sizes here, but if true, this could make it

difficult to find statistical significance).

In my opinion, these two issues (i.e., subjectivity of decisions and aggregation of statistics) have

been critical turning points in court decisions involving class certification.

IF YOU ARE UNSURE, WHAT SPECIFIC INFORMATION DO YOU NEED TO BE ABLE TO RENDER A

VERDICT IN THIS CASE?

SETTING ASIDE THE ALLEGED ILLEGALITIES, WHAT SPECIFIC HR PRACTICES COULD WAL-MART

IMPROVE TO MAKE THEIR HR MORE EFFECTIVE AND (PERHAPS) TO LOWER THE LIKELIHOOD

OF SUCH TITLE VII LAWSUITS IN THE FUTURE?

There can be no question that the subjectivity in the Wal-Mart process undermined its validity.

There are clearly more valid methods for selecting managers than the programs described by

Wal-Mart. We’ll discuss these options in Chapter 6. Also, there is a need for more uniformity

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CHAPTER 6 – CRITICAL THINKING APPLICATIONS

Critical Thinking Application 6-A

What Privacy Do We Have in the Workplace?

Mary E. Wilson

Should the company be allowed to ask such questions? Think of all issues that you

considered in taking a position or, if you aren’t sure what your position is, what additional

information do you need?

To increase the probability of legal defensibility the questions should be job related (if adverse

impact is established). The Company can also defend its use of the test by showing that

emotional stability is an essential fucntion for the job and that this test has a long history of

measuring emotional stability.

If the test is a valid predictor of emotional stability and emotional stability is “essential” to do

the job, then is the company free to use the test? This was an actual case in California. Target

settled out of court mainly to avoid adverse publicity but with consideration of the right to

privacy issue the plaintiff raised. The plaintiff declared the job was not high-risk, one that

One of the questions asked is whether this particular test is a valid predictor (accurate and

reliable) of emotional stability. Since the entire test was validated as a measure of emotional

stability, then the problem is not with the test itself but with specific questions. The questions

that seemed to need explanation as to why they had been included in the test were:

10. I feel sure there is only one true religion. (Religious freedom is protected under

law and could be a violation of Title VII).

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test); could be a violation of state laws.

24.–26 Same as #10.

How would the company prove the job relatedness of such a test?

If the test was found valid in predicting emotional stability and performance on the job,

When must the company prove the job relatedness of the test?

In your home state, can a company use political information to make decisions about people?

For federal employees, the Civil Service Reform Act, 5 U.S.C. section 2301, prohibits the

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Critical Thinking Application 6-B

The Measurement of Personality Traits

* Contributed by Kathleen Bernardin

Research supports the proposition that stable personality characteristics are related to not

only success in particular occupations but also job and life satisfaction. The purpose of this

exercise is to provide a profile of your personality based on valid measures of personality. As

discussed in Chapter 6, the “Big Five” factor structure has gained widespread acceptance by

personality researchers and has greatly influenced the research into individual differences.

There is also strong evidence that personality measures have utility in providing vocational

and career guidance. It is clear that certain Big Five factors and their combinations are

correlated with career choice, success, and satisfaction.

More recent research supports the validity of core self-evaluations and Emotional

Intelligence. Part B pertains to the Core Self-Evaluations Scale (CSES).

Part A. The Five-Factor Model of Personality

Discussion Questions for Part A:

1. What does research say about the use of the Five–Factor Model (FFM) for predicting

success as a manager?

2. What does research say about the use of the Five-Factor Model for predicting success in

sales?

Conscientiousness and Emotional Stability have useful predictive validity across all jobs

(including sales) but that Conscientiousness had the highest validity Extraversion also has

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3. How does the validity of personality tests compare to the validity of general mental (or

cognitive) ability tests? Explain this in correlational terms.

Figure 6-2

4. Doesn’t faking on tests like the one you took completely undermine the usefulness of such

tests for actual personnel selection? Wouldn’t the “fakers” get the job and those who

answered honestly not be hired (or promoted)? Justify your answer with research.

There is no question that applicant faking on most noncognitive measures occurs, but what is

not clear is the extent to which faking reduces the validity of personality tests. Most

5. Are there any other methods besides self-report inventories that would provide for an

assessment of personality traits that might improve the validity in the assessment of these

traits?

Projective techniques (i.e., MSCS, TAT) have shown some but limited validity. Superior

approach would be “high valid” interview. While situational interviews are valid, the behavioral

interviewing approach where candidates describe actual experiences or accomplishments with

accomplishments.

6. What is incremental validity? Does this term apply to the assessment of personality traits?

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Research indicates that a combination of cognitive and motivational or personality tests

may lead to a more comprehensive assessment of an individual and higher validity than any

method by itself. Motivational or personality tests or assessments through interviews add what

is known as incremental validity in the prediction of job performance. In general, GMA or

cognitive ability and job knowledge tests are valid but additional (and valid) tools can add

validity to the prediction and have the potential to reduce adverse impact. One recent study in

retail showed the use of a personality test and an interview provided incremental validity to the

strong validity of a GMA and reduced the level of adverse impact for the selection of

managerial trainees and in the prediction of subsequent job performance.

Recent research also suggests that we might do a better job predicting performance with more

narrowly defined traits or subfactors that define a broader trait such as one from the FFM. A

meta-analysis found that narrow traits underlying the Conscientiousness (C) factor from the

FFM provided incremental predictive validity above and beyond the global Conscientiousness

Part B. The Core Self-Evaluations Scale

Discussion Questions for Part B:

1. What does research say about the relationship between the FFM and the Core–Self

Evaluations Scale?

The core self-evaluation is a basic assessment of one’s capability and potential. There is some

research that investigated the extent to which these new measures add predictive value (or

incremental validity) beyond the Big Five or other selection tools. In general, this research

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2. If you were going to use a self-report inventory to select sales personnel, would you use a

Big-Five measure, the CSES, neither, or both? Explain your answer and cite any relevant

research.

There is stronger evidence supporting the use of the FFM. Conscientiousness and Emotional

Stability have useful predictive validity across all jobs (including sales) but that

Judge, T. & Hurst, C. (2007). Capitalizing on one’s advantages: Role of core self-evaluations.

Personnel Psychology, 92, 1212-1227.

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CHAPTER 7 – CRITICAL THINKING APPLICATIONS

Critical Thinking Application 7-A

Should We Measure Competencies in Performance Appraisal?

When is it appropriate to measure competencies? Describe an appraisal system in which the

purposes for the appraisal system were accomplished when the system called for

assessments of personal competencies as opposed to a record of performance outcomes.

The latest trend in performance appraisal is evaluating the extent to which ratees possess

certain “competencies.” These competencies resemble the old traits that have been

Competencies may be a useful component in a program of personal development or as a tool of

assessment to determine suitability for another job or assignment. However, assessments of

competencies should be confused with the measurement of performance (i.e., a record of

outcomes). Performance Management systems should focus on a record of outcomes and not

of any of these areas; we’re just not measuring performance. We can assess the extent to

which a person possesses certain technical skills through ratings by those familiar with a

person’s skills (although it would probably be better to use some form of test). It is the

manifestation of those skills on the job in the form of outcomes that constitutes performance.

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attitude (foul shooting is for sissies), his motion, all of which may be predictors, correlates or

diagnostics of his performance as a foul shooter. But his actual foul shooting in 2006 was 48%

and that is the record of his performance on this element of the game.

Stark, Luther and Valvano (1996) describe high levels of disagreement among managers at

Jaguar Cars when the managers received low ratings on a competency they label “integrity.”

(Hagan et al., in press) has shown that 360-degree competency assessments where customer

data are included showed strong validity (.50) in the prediction of assessment center

performance. The 360-degree assessments also demonstrated incremental validity over

management: A focus on precision, customers, and situational constraints. In J. W. Smither

(Ed.). Performance appraisal: State of the art in practice (pp. 3-48). San Francisco: Jossey-

Bass.

Bernardin, H. J., Kane, J.S., Spina, J., Johnson, D. & Ross, S. (1995). Performance appraisal

design, development and implementation. In G. Ferris, S. D. Rosen & D. T. Barnum (Eds.).

Stark, M.J., Luther, W., & Valvano, S. (1996). Jaguar cars drives toward competency-based

pay. Compensation & Benefits Review, November/December, 34–39.

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Critical Thinking Application 7-B

The Role of Mystery Shoppers in Performance Appraisal

Pick a job in which “mystery shoppers” might provide helpful and unique data. Describe how

you would develop the system and incorporate data from this system into the performance–

appraisal system.

Some companies now tie PM criteria to the results of evaluations from so-called professional

“customers” or “mystery shoppers.” The retail industry has made noteworthy efforts in

shoppers follow a script in order to test the extent to which store employees adhere to their

training regarding customer interactions.

The use of mystery shopping has become so popular that, in 1994, one contractor reported a

professional shopping staff of 8,800 and a business that was growing at the rate of 50% per

year (Helliker, 1994). Other organizations, including Burger King, Neiman Marcus, Hyatt Hotels,

manager once a month. The data, aggregated across the year, becomes a key determinant of

each manager’s annual appraisal, bonus, base salary increase and objectives for the next

appraisal cycle. There is little research on the validity and reliability of mystery shopping, nor

has the effect of mystery shopping on business performance been rigorously examined.

The ability of mystery shopping to materially influence organizational effectiveness will be

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as determining the length of time that it takes an associate to approach them, or how long they

await final service delivery, or the number of times the telephone rings before it is answered, or

A recent study (Hagan et al., in press) in retail found that mystery shopper assessments were

significantly correlated with the assessment center criteria and exhibited incremental validity

beyond supervisory assessments.

Also, could a university use “mystery shoppers?” If you think it could, should it and what

would the “shoppers” look for?

Given the availability students as a source of evaluation that, some would argue, are theoretical

“customers,” the use of mystery shoppers is probably unnecessary. Data from the student

“customers,” combined with peer evaluation should provide the most important information

References

Bernardin, H. J., Hagan, C. M., Kane, J. S., & Villanova, P. (1998). Effective performance

management: A focus on precision, customers, and situational constraints. In J. W. Smither

(Ed.). Performance appraisal: State of the art in practice (pp. 3-48). San Francisco: Jossey-

Bass.

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New directions in human resource management (pp. 1-27). Greenwich, CT: Information

Age.

Hagan, C. M., Konopaske, R. Bernardin, H.J. and Tyler, C. L. (2006). Predicting Assessment

Center Performance with 360-degree, Top-down, and Customer-based Competency

Assessments. Human Resource Management. 45, 357-390.

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Critical Thinking Application 7-C

Allegations of Age and Race Discrimination Against Ford Motor Company

How would you test the theories of discrimination in these complaints?

A yardstick recommended by the EEOC and adopted in numerous cases for determining

Play the role of consultant to Ford and write a one-page memo recommending and justifying

the data and documentation that should be analyzed. Your memo should also include an

evaluation of the forced distribution rating system and refer to research in its effects.

What is your opinion as to whether the plaintiffs in the ADEA (age) case can use a “disparate

impact” theory to define prima facie discrimination. Provide an example of how statistics

could be used to show ‘prima facie’ discrimination in decision related to retention or

terminations.

Until recently, disparate impact theory was not allowed in most Circuit Courts for ADEA cases;

however, this changed in Smith v. Jackson when the Supreme Court ruled that ‘disparate

impact’ theory could be used in ADEA cases. ADEA plaintiffs can now use the four-fifth’s rule to

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Who would have the burden of proof if such evidence was presented?

The defendant must either develop an argument that the performance appraisal did not

discriminate the employees based on age or race. Since the plaintiff will follow this line, a study

is needed which explores the use of alternative methods of performance appraisal that are

Ford used the system to retain the diversity within its managers that their diversity program

had helped create. Significant differences in appraisals as a function of race or age when the

appraisal system/form changes would be very difficult to defend.

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Critical Thinking Application 7-D

Performance Appraisal Characteristics Questionnaire

The purpose of this exercise is to introduce the student to a probabilistic approach for assessing

the possible legal implications for an organization that could be involved in a lawsuit concerning

the organization’s performance appraisal system. Students will describe the characteristics of a

Directions: Think of a work situation in which your organization uses performance appraisal as a

basis for any type of personnel decision (e.g., promotions, reductions-in-force, transfers, lay-

The 15 appraisal characteristics described in this questionnaire represent characteristics that

have been shown to be related to the outcomes of court cases. This list is presented in terms of

the ability of each characteristic to predict a favorable outcome for management:

• A perfect score on this instrument is a NO to #1 and YES responses to items 2-15. This

“perfect” score means management would be more likely to prevail in a legal challenge

to the personnel decisions that derived from the performance appraisals.

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A NO response to Item #1 (Does your organization violate the 80% rule in the decisions from

the performance appraisal data?) is the best predictor of positive outcomes for the organization

(i.e., the defendant is more likely to win the lawsuit). A YES response to this item could

constitute the statistical basis of a claim of “disparate impact” discrimination, a theory that can

used in Title VII cases involving allegations of discrimination against women, minorities or other

protected classes and, claims of age discrimination.

Did your organization…

1. Violate the 80% rule in the decisions from the performance appraisal data?

2. Use procedures for appraisal and the resultant personnel decisions that do not differ as a

function of the race, sex, national origin, religion, or age of those affected by such decisions?

3. Use objective or countable (nonrated) performance data?

4. Have a formal system of review or appeal for situations in which the rated individual

disagrees with a rating?

5. Use more than one independent evaluator of performance?

6. Use a formal, standardized system for the personnel decision?

7. Make certain evaluators have had ample opportunity to observe rate performance (if rating

must be made)?

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8. Avoid ratings on traits such as dependability, drive, aptitude, attitude or initiative?

9. Validate the performance appraisal data with other data?

10. Communicate specific performance standards to employees?

11. Provide written instructions on how to complete the performance evaluations?

12. Evaluate employees on specific work dimensions rather than a single overall or global

measure?

13. Require documentation for extreme ratings (e.g., critical incidents)?

14. Provide employees with an opportunity to review their appraisals?

15. Train personnel decision makers on laws regarding discrimination?

The scoring key was derived from a study conducted by John Bernardin where labor attorneys

Discussion Questions:

1. Prepare an example of an “80 percent rule” violation showing prima facie evidence of

“disparate impact” against older workers. Use any type of personnel decision (e.g.,

terminations/retentions, promotions) that would involve performance appraisal data.

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The easiest illustration for understanding is to focus on retention rather then termination. An

2. Should a forced-distribution system be installed to eliminate problems with personnel

decisions? Explain your answer based on research.

Research on forced distribution is not favorable (Lawler, 2003). Enron had a GE-like system in

place when the company collapsed and Microsoft dropped this approach in 2008. Companies

3. Assuming the company has violated the “80 percent rule” in its decision making, what

should the company do next?

A careful look at the answers to Questions 2-15 is required in the context of the appraisal