Quản trị kinh doanh - Chapter 2: Recruitment

Chapter 2: Recruitment13/29/2020Chapter 2: RecruitmentScreening Job ApplicantsCredentialsInformativeness of CredentialCost of Obtaining the CredentialReturn on Investment in the CredentialLearning a Worker’s ProductivityScreening BankersScreening is more profitable when the test is more effective.Screening is more profitable when the stakes are higher.For Whom Is Screening Profitable?ProbationImplications of Probationary ScreeningSignalingWho Pays and Who Benefits?Education as a signalSignaling More Formally: Separating and Pooling EquilibriaWhich Type of Firm Is More Likely to Use Signaling? 23/29/2020Chapter 2 – Recruiting3After completing this chapter, you will be able to answer the following questions:How can I reduce interviewing and hiring costs for my firm?Should credentials be required when hiring?Should the skills of my workers change if my firm increases its investment in capital equipment?Should my firm adjust pay on the basis of performance?How would I implement a probationary hiring system?3/29/2020Screening Job Applicants3/29/20204Concept DefinitionsAdverse Selection: The tendency of contracts (agreements) to attract the wrong participantsSelf Selection: Occurs when contract terms discourage inappropriate participants *Screening: Application of criteria that are correlated with desired outcomes53/29/2020Key QuestionQuestion:How do we design a hiring and compensation scheme that minimizes adverse selection and encourages self selection?Toolset:ScreeningProbationMeasurementWage structure6CredentialsEducationExperience3/29/2020Hiring Standards3/29/20207Screening v. Risky HiresTo avoid hiring “lemons,” we can also screen candidatese.g. Sanford Bernstein analysts: intensive screening via credentials, tests, psychometric evaluations, interviewsrisky hires more relevant if there is high upside potentialscreening more relevant when the issue is avoiding downside riskMost screening methods are disappointingly ineffectivefalse positives & false negatives“Personality Plus”“How Big Data is Playing Recruiter for Specialized Workers”most accurate screen = job performanceprobation may improve recruiting83/29/20202. Signaling & RecruitingYou are talented & would like to distinguish yourself from less talented applicants. How?invest in difficult-to-obtain credentials (one reason you’re here)signal your confidence in yourself to potential employersNow flip the question. Can an employer structure the job offer to encourage the most talented to apply?assumptionstwo worker types, E & Dp = probability random worker is type Eapplicants know which type they areW = wage; Q = productivity; QD WED types don’t if: a + bQD 2WED-types should expect worse than elsewhere  W1 + (1-q)W2 + qWD WE + (WE – W1)/q > WEW1 < W2With this approach,D’s never applyE’s post a bond (W1 – WE) during probation, earn deferred reward (W2 – WE) laterbond is larger (W1 is smaller), the more accurate the sorting qreward is larger, the greater the differences in productivity (& market values) b/w D & EOf course, this is pay for performance243/29/2020RECAP – Chapter 2Firm should design compensation schemes that attract desired workers and weed out all others whenever possibleCredentials can be effective screens IFThey are correlated with job performance ANDDesired workers have an easier time acquiring themContingent contracts can be effective when outputs are measurableProbationary hiring can have a dual benefitThe firm is able to observe actual employee performanceThose who cannot perform will be less willing (provided the probation is properly designed)To sort effectively, must pay better wages for better workers253/29/2020