Introduction

Recent research suggests that HR practices can have considerable impact on both
individual and organizational performance. These findings strongly suggest that not
knowing this HR research can be costly to organizations. In this article, we pinpoint areas
where HR practitioners seem to be most unaware of research findings related to effective
HR practices, based on responses by a large sample of HR managers. The seven questions
that exhibited the greatest disagreement between current research findings and respondents'
beliefs are explored, along with their management implications and suggestions for
implementing the findings.

Managers as a class are anything but stupid. But there is evidence that the job-specific
knowledge bases of many, and perhaps most, executives are quite substandard. In turn, low
knowledge bases may lead executives to make decisions that are less than optimal—and
sometimes not even satisfactory.

Considerable research demonstrates that most organizations do not employ state-of-the-art

human resource (HR) practices. One reason for the gap between research and practice is
that very few practicing HR managers read the research literature. Two major explanations
have been offered as to why this is the case. The first is that HR research has become
excessively technical, thus discouraging practitioners from attempting to keep up with the
latest research findings. This view assumes that practicing HR managers regard to research
findings as potentially useful, but inaccessible. The less sanguine view is that HR
practitioners do not read the research because they see it as irrelevant or impractical for
their needs.

Whatever HR managers may feel about academic research findings, the evidence is
accumulating that certain HR practices are consistently related to higher individual
performance, organizational productivity, and firm financial performance. At least two
research trends over the past two decades have increased our ability to detect relationships
between HR practices and performance. The first is the development of statistical
techniques which allow aggregation of many studies in order to reach more reliable
conclusions about both average effects and contextual moderators. The second is the

1|P a ge
emergence of the Strategic HR literature, which has stimulated much more research into
the relationships between HR practices and performance at the level of the firm rather than
the individual. This last step means that we no longer have to wonder about the degree to
which relationships found at the individual level are mirrored at higher levels of
aggregation.

As one example of such firm-level research, a study by Welbourne and Andrews found
that new companies that placed a high value on HR (as assessed by content of their
prospectuses) and that included high levels of organizationally based pay-for-performance
had a five-year survival rate of 92 percent as compared with 34 percent for companies that
were low on both dimensions. As another example, Huselid found that an increase of one
standard deviation in scores on a “high-performance HR practices” scale (which included
such practices as employee attitude surveying, paying for performance, formal
communication programs, and use of employment tests) was associated with a 23 percent
increase in accounting profits and an 8 percent increase in economic value.

Terpstra and Rozell found that companies whose HR professionals read the academic
research literature have higher financial performance than those that do not. Although the
results of HR research are clearly relevant to practicing managers, not so clear is the extent
to which HR managers' current beliefs are consistent (or inconsistent) with the latest
findings. The areas of greatest inconsistency should dominate efforts to inform managers
about HR research.

The Seven Most Common Misconceptions

We discuss the seven HR research findings that were least believed by our responding
group of HR managers. The first four of these findings pertain primarily to issues of
selection (i.e. employee traits that are most strongly associated with performance and
effective means of assessing them). The next two pertain to issues of effective performance
management, performance appraisal, and performance improvement. The final item
concerns problems with relying on survey data to determine the importance of pay (and
other potential motivators) in people’s behavior.

2|P a ge
Seven Common Misconceptions are-

1. Conscientiousness is a better predictor of performance than intelligence.

2. Companies that screen job applicants for values have higher performance than those
that screen for intelligence.

3. Integrity tests don’t work well in practice because so many people lie on them.

4. Integrity tests have adverse impact on racial minorities.

5. Encouraging employee participation is more effective for improving organizational

performance than setting performance goals.

6. Most errors in performance appraisal can be eliminated by providing training to

managers on how to avoid them.

7. If employees are asked how important pay is to them, they are likely to overestimate
its true importance.

Research Findings versus Practitioner Beliefs

Misconception 1: Conscientiousness and Intelligence

Practitioner Beliefs:

On average, conscientiousness is a better predictor of employee performance than

intelligence.

Research Findings:

Although 72 percent of participants agreed with this statement, a substantial amount of

research suggests that it is incorrect. The authors conclude:

Research evidence for the validity of GMA measures for predicting job performance
is stronger than that for any other method, literally thousands of studies have been
conducted over the last nine decades. Because of its special status, GMA can be
considered the primary personnel measure for hiring decisions. Since it is an American
industry based research, consequently it shows the result of American society’s
3|P a ge
practice. Americans have long held negative stereotypes about highly intelligent
people. One such stereotype is that intelligent people are brilliant but impractical
("ivory tower intellectuals"), while a second views them as capable, but socially inept
("nerd, geek. Egghead"). A third stereotype likens intelligent people to the hare in
Aesop's fable-erratic performers who are brilliant on occasion but who generally
underperform the "slow and steady" in the long run. A final stereotype portrays
intelligent people as rude, arrogant, and difficult to manage.

Respondents
Agree Disagree

80%

70%

60%

50%

40%

30%

20%

10%

0%
Response

Figure 1: Respondents of Research Findings Misconception 1

Real life Example

No company is found that comply with this research statement.

Misconception 2: Values and Intelligence

Practitioner Beliefs

Companies that screen job applicants for values have higher performance than those
that screen for intelligence.

4|P a ge
Research Findings

A large majority of our responding SHRM managers agreed with this statement
(57 percent), although available research evidence does not support it. At the outset,
it should be said that there is far less research on the effects of selecting for values than
there is about selecting for GMA or personality. Still, much evidence suggests that
selecting for GMA leads to higher performance, and very little evidence suggests the
same for values.

SHRM respondent

43% Agree

57% Disagree

Figure 2: Respondents of Research Findings Misconception 2

Real life Example

Introduction of Lincoln Electric

Lincoln Electric Holdings, Inc. is an American multinational and a global manufacturer

of welding products, arc welding equipment, welding consumables, plasma and oxy-
fuel cutting equipment and robotic welding systems. The Fortune 1000 company is
headquartered in Euclid, Ohio, United States and has a worldwide network of
distributors and sales offices covering more than 160 countries. It has 42 manufacturing
locations in North America, Europe, Middle East, Asia and Latin America. It also

5|P a ge
operates manufacturing alliances and joint ventures in 19 countries. The company
reported over $2.9 billion sales in 2013, with sales from North America accounting for
50% of it. Lincoln has over 8500+ employees globally and 3000 in the United States
alone. Among Lincoln Electric's subsidiaries is The Harris Products Group, which is a
manufacturer of Welding Consumables, Gas Apparatus, and other Specialty Products.

What they choose to follow:

For the hiring of its U.S. workforce Lincoln Electronic is applying best practice
methods as it pursues a selective employment approach aiming at attracting skilled
personnel that can connect to the company’s high performance ethic and live up to
quality standards. New hires have to pass a three-month probation period and prove
their work dedication in trainee programme (Bjorkman & Galunic 2003). It is coherent
with Lincoln's strategy of binding the best employees and rewarding them for their
long-term achievements with responsibility thus keeping its intellectual capital and
ensuring a sustainable competitive advantage in fields of performance, knowledge and
quality. In the international management Lincoln made the mistake of relying too much
on inexperienced U.S. managers from within and only after the disaster of the
international subsidiaries started to move from its unitary strategy towards a more
responsive best fit approach to external environmental by hiring more internationally
experienced external managers in China and Europe which fits the international
expansion strategy (Hastings 1999).

Introduction of Nucor

Nucor Corporation is a producer of steel and related products headquartered in

Charlotte, North Carolina. It is the largest steel producer in the United States of
America and is the largest "mini-mill" steelmaker (i.e. it uses electric arc furnaces to
melt scrap steel as opposed to blast furnaces to melt iron). Nucor is North America's
largest recycler of any material and recycled 16.9 million tons of scrap in 2015

What they choose to follow:

Appropriate selection of required workforce is viewed as one of the key factors in

success of Nucor Corporation and their recruitment policy allow them to maintain the

6|P a ge
lean management structure with minimal supervision. However, in case of Nucor
employees are not purely selected onto their technical skills but the ability to work and
communicate with team fellows with low supervision is given priority (ICMR, 2012).
This requirement of team work and self-reliance is essential as it is consistent with
organization culture of Nucor. So, the importance is given to mindset even in case of
low technicalities. Heskett, (2002) and Hoque, (2000) also provide the same argument
and found that many of high performance service providers tried to recruit for attitude
and train them subsequently for required skills. On the other hand Nucor recruitment
and selection process is quite flexible as no job description is there that should follow
while selecting required workforce.

Misconception 3: Integrity Test

Integrity testing (sometimes called “honesty testing”) is a type of personality test designed
to verify whether a candidate is honest, dependable, and has the necessary qualities of
independence.

Practitioner Beliefs

Integrity tests doesn’t work well in practice because so many people lie on them.

Research Findings
“Integrity tests” that try to predict whether someone will steal, be absent, or whether take
advantages of an employer, they don’t work well in practice because so many people lie
on them.

Only 32 percent of HR managers realized that this was an inaccurate statement. People try
to make themselves look a little more ethical than they actually are. This does not seem to
affect the usefulness of these tests as predictors of performance.

7|P a ge
 Respondents

7%

18% HR Managers

Directors
49%
Vice presidents

Other functional areas

26%

Figure 3: Respondents of Research Findings of Misconception 3

Research shows that applicants can distort their answers on integrity test in order to make
themselves look better to employers. In addition, many applicants probably do distort their
answers to some extent, particularly when they believe the scores will be used for selection
or promotion purposes. Interestingly, however, the fact that applicants can distort their
responses to integrity tests does not make them ineffective as predictors of performance.

Real Life Example

We hardly find any organization that conduct integrity test rather they conduct integrity
training program after appointing the employee. Now we are showing some aspects of
Integrity Program of Unilever Bangladesh Limited.

Unilever Bangladesh Limited

The Unilever Bangladesh Limited is consumer goods company based in Dhaka,

Bangladesh and founded in 1964, engaged in the manufacture and distribution of home
care products, personal care products, and foods. It is a joint venture of the Government of
Bangladesh and Unilever. Unilever holds 60.4% and Government of Bangladesh holds

8|P a ge
39.6% of its share. The company was formerly known as Lever Brothers Bangladesh Ltd.
and changed its name in December 2004.

Unilever’s Integrity Programme

Unilever have strong values and clear policies and standards to ensure their employees not
only do things right but also do the right thing.

Unilever’s Integrity programme brings their values to life for all employees, and helps them
apply their ethical standards day-to-day. In addition to their Code of Business Principles,
it includes clear policies, guidelines and related learning materials, as well as robust
procedures and controls to help them prevent, detect and respond to any inappropriate
behavior.

Their focus on integrity programme makes Unilever stronger. It helps them to attract, retain
and engage the best employees, and better able to select the right suppliers and business
partners. It protects their people, assets, reputation and relationships with stakeholders. It
supports the conditions to work collaboratively, both internally and with partners. And
ultimately it helps them grow sustainably and deliver on the Unilever Sustainable Living
Plan (USLP).

Can integrity test screen out good candidates?

False positives are always a concern. Past research found that employee integrity tests
result in honest people being labeled dishonest. Some studies even show that overt integrity
tests can sometimes misclassify almost half of honest candidates.

Many employers are tempted to use them to shrink their applicant pool. So, they reject
everyone who scores below standard. But, if honest, talented employees are among those
rejected, companies could be missing out.

What to do:

It’s best to avoid allowing employee integrity tests to make decisions for you. Take some
time to look at answers and interpret results. We can also use integrity tests in conjunction
with other assessment methods. For example, integrity tests have high incremental
validity when they’re paired with GMA (general mental ability) tests. This means that

9|P a ge
using integrity tests can enhance the predictive validity of ability tests. In fact, research
suggests that those two tests together have the highest predictive power for job
performance.

4. Misconception: Integrity Test and Racial Minorities

Practitioner Beliefs:
Integrity tests have adverse impact on racial minorities.

Research Findings:

Practitioner Beliefs

30%
Agree
Disagree

70%

Figure 3: Respondents of Research Findings of Misconception 4

Although nearly 70 percent of our respondents thought that this might be true, it is not the
case.

Recent large-sample research evidence reveals that differences in integrity test scores
across racial and ethnic groups are trivial. Thus, another potential advantage of using
integrity tests in conjunction with cognitive ability tests is that, unlike ability tests, integrity
tests are unlikely to produce adverse impact. Furthermore, although evidence suggests that

10 | P a g e
integrity tests are not among the best- liked selection devices, they generally are seen by
applicants as an appropriate means of differentiating among candidates.

Real Life Example :

About Marks & Spencer Plc (M&S)
Marks & Spencer Group plc (M&S) is a major British multinational retailer headquartered
in Westminster, London that specializes in selling clothing, home products and luxury food
products. It is listed on the London Stock Exchange and is a constituent of the FTSE 100
Index.

M&S was founded in 1884 by Michael Marks and Thomas Spencer in Leeds. The
company also began to sell branded goods like Kellogg's Corn Flakes in November 2008.
M&S currently has 979 stores across the U.K. including 615 that only sell food products.

In 1998, the company became the first British retailer to make a pre-tax profit of over
£1 billion, although subsequently it went into a sudden slump, which took the company
and its stakeholders by surprise. In November 2009, it was announced that Marc Bolland,
formerly of Morrisons, would take over as chief executive from executive chairman Stuart
Rose in early 2010; Rose remained in the role of non-executive chairman until he was
replaced by Robert Swannell in January 2011. In recent years, its clothing sales have fallen
whilst food sales have increased after axing the St. Michael brand name for their own
brand.

On 22 May 2018, it was confirmed that over 100 stores will have closed by 2022 in a
"radical" plan. Whether more stores will close is yet to be confirmed.

How they implement:

Combining integrity tests with tests of GMA (General Mental Ability) may reduce the
amount of adverse impact in overall selection systems because minorities and whites have
nearly equivalent scores on integrity tests.

11 | P a g e
Misconception 5: Performance Improvement
Research Findings
The research has shown effective goal setting can increase more the performance level of
organization than participation of the employee in decision making. The rate of agree and
disagree regarding this issue is given below:

Figure 5: Respondents of Research Findings of Misconception 5

Only 17% are disagreed with this statement. Evidence regarding this issues comes from a
number of sources.

Research by Ed Lock and His Colleagues

They used the meta analysis to examine the comparative effectiveness of various
performance improvement interventions. This research suggests that on average ,
performance improves by 16 percent following goal setting interventions where 15% for
following the employee participation in decision making. Moreover, goal setting showed
the positive result at all cases where participation in decision making leads to decrease in
performance in a substantial minority of case where the goals and responsibilities are not
clear.

12 | P a g e
Research by Mckinsey
Research by Mckinsey on high performance work teams also suggests the value of
challenging goals for increasing the effectiveness of participation. In this study that
distinguish high performing teams from mediocre. They were surprised to find that the
typical emphasis on building teamwork was ineffective for producing peak levels of team
performance rather providing the challenging goal brings the high performance.
So at the end, we find that on average performance improves 16% when goals setting is
implemented and for employee participation it is 1% less.

Real Life Examples

Microsoft Corporation
Corporation (MS) is an American multinational technology company. It develops,
manufactures, licenses, supports and sells computer software, consumer electronics,
personal computers, and related services. Its best known software products are the
Microsoft Windows line of operating systems, the Microsoft Office suite, and the Internet
Explorer and Edge web browsers. As of 2016, it is the world's largest software maker by
revenue and one of the world's most valuable companies. The word "Microsoft" is a
portmanteau of "microcomputer" and "software" Microsoft is ranked No. 30 in the 2018
Fortune 500 rankings of the largest United States corporations by total revenue.

Practices of Microsoft Corporation

There are some complementary strategies that characterize exactly how Microsoft
competes and operates in a successful manner are given below:
"Brain Trust" of talented employees and exceptional management, "bang for the buck"
competitive strategies, and clear organizational goals producing, learning, and improving;
a flexible, incremental approach to product development; and a relentless pursuit of future
markets.
So above of these they basically highly focus on the goal setting causes they belief that
goal setting can bring the high performance in a wide range. Because, having creative
people in a high-tech company is important, it is often important to direct their creativity.
For this reason, Microsoft work assignments are characterizing by strong emphasis on

13 | P a g e
project deadlines, multiple milestones on the path to project completion and frequent
merging of different employee’s pieces of code to see how well the project is moving to
completion which all are representing the activities of setting performance goal.
So in a short, Microsoft practices goal setting policy for performance improvement rather
focusing highly on employee participation.

Southwest Airlines
Southwest Airlines Co. is a major United States airline headquartered in Dallas, Texas, and
is the world’s largest low-cost carrier. The airline was established in 1967 by Herb Kelleher
as Air Southwest Co. and adopted its current name, Southwest Airlines Co., in 1971, when
it began operating as an intrastate airline wholly within the state of Texas, first flying
between Dallas and San Antonio. The airline has more than 58,000 employees as of
September 2018 and operates more than 4,000 departures a day during peak travel season.

Practices of Southwest Airlines

A key feature of SWA performance improvement are high level of participation, clear goal,
role and responsibility of employee. SWA emphasizes a rigorous tracking and rewarding
of individual performance, coupled with clear, immediate and straight feedback. All
employees at SWA have a clear image of the background where they need to participate,
which work they have to do, they clearly comprehend how performance is measured, and
what it is they can do in order to improve it. The authority of SWA encourage their
employee to be free to participate at decision making as they belief employees are the
important stakeholder of the company, they have important information to guide the
organization and having clear idea about responsibility.
Analyzing this we found that they have good participation level as well as clear goal so
that’s the reason to increase performance of this company.

Springfield Remanufacturing
SRC was established in 1983. By 1988, SRC's debt to equity ratio was down to 1.8 to 1,
and the business had a value of $43 million. The stock price, $0.10 in 1983, had increased
to $13 per share. By 2015, the stock was worth over $199 per share. SRC founded and

14 | P a g e
invested in more than 60 separate companies that do everything from consulting to
packaging to building high-performance engines.

Practices of Springfield Remanufacturing

Springfield Remanufacturing think employee involvement can change anything as
employees are the core asset of the company. So they provided much motivation to
employees to take part at any important decision making of the company. Now they are
enjoying the high performance as they increase the employee participation in decision
making which is the core of success.

6. Misconception: Performance Appraisal

Practitioner Beliefs:

Most errors in performance appraisals can be eliminated by providing

training that describes the kind s of errors managers tend to make and
suggesting ways to avoid them.

Research Findings:

All those 70% of HR respondents agreed with the preceding sentence research clearly
shows is to be false.

Performance-appraisal errors are extremely difficult to eliminate. Training to

eliminate certain types of errors often introduces other types of errors and
sometimes even decreases accuracy. The most common appraisal error is
leniency and managers often realize they are committing it. Mere training is
insufficient to eliminate these kinds of errors; more systemic action is required
such as intensive monitoring or forced rankings.

15 | P a g e
 PRACTITIONER BELIEFS
Agree Disagree

30%

70%

Figure 6: Practitioner Beliefs Respondents of Research Findings of Misconception 6

Real Life Example

About General Electric Company (GE):
General Electric Company (GE) is an American multinational conglomerate incorporated
in New York and headquartered in Boston. As of 2018, the company operates through the
following segments: aviation, healthcare, power, renewable energy, digital industry,
additive manufacturing, venture capital and finance, lighting, transportation, and oil and
gas. In 2018, GE ranked among the Fortune 500 as the 18th-largest firm in the U.S. by
gross revenue. In 2011, GE ranked among the Fortune 20 as the 14th-most profitable
company. As of 2012, the company was listed as the fourth-largest in the world among the
Forbes Global 2000, further metrics being taken into account. Two employees of GE have
been awarded the Nobel Prize: Irving Langmuir for chemistry in 1932 and Ivar Giaever for
physics in 1973.

16 | P a g e
How they implementing the PMS:
General Electric found that they were unable to eliminate excessive
leniency from performance appraisals until they began to insist that
managers rank employees on a bell curve and attached substantial
penalties to managers for failure to do so. Although this system appears to
be working well at GE, it should be noted t h a t this strong ratings
differentiation is accompanied by many other supportive actions, such as
three thorough performance reviews of managers each year, very aggressive

career planning, highly differentiated monetary rewards linked to appraisal

distributions, and refusal to promote managers who will not make the
distinctions. They are using forced distribution ranking because its easier to
implement and have less error then ratings system. Also, General Electric (GE)
has decided to overhaul its performance review system in favor of more flexibility in
compensation.

In the past 2 years, around 30,000 GE employees have tried rating-free reviews. An internal
study found that many managers said a performance review system without a rating was
more motivating which triggered the company’s decision to scrap its 40 year old five-point
scale appraisal system.

17 | P a g e
Following the trend of going mobile, GE has recently introduced the PD@GE smartphone
app which allows employees to assess subordinates and superiors on an ongoing basis
rather than an annual appraisal.

The new system asks employees and managers to exchange frequent feedback via the app
in person or by phone. The messages are compiled into a performance summary at the end
of the year. The new appraisal system will apply to GE’s 200,000 salaried employees.

Former CEO Jack Welch defended the bell curve in The Wall Street Journal (paywall).
He argues that "rank and yank" is a pejorative term, and prefers to call it "differentiation."
But he argues forcefully that candid appraisal of employees is essential, that they need to
know exactly where they stand in an organization, and that with constant communication
and feedback, it isn't as harsh as people make it out to be.

"Yes, I realize that some believe the bell-curve aspect of differentiation is 'cruel,'" Welch
wrote. "That always strikes me as odd. We grade children in school, often as young as 9 or
10, and no one calls that cruel. But somehow adults can't take it? Explain that one to me."

Why Are They Using Bell Curve & App review?

Traditional performance rating system has many drawbacks which are very difficult to
remove. The drawbacks include halo/horn effect, Leniency/severity, regency, contrast
effect, stereotyping etc. Bell curve ranking method and app review don’t have above
limitations that’s why GE first who uses those methods successfully. Based on bell curve
GE sacked 10% employees each year.

Misconception 7: Importance of pay

Practioner beleifs: surveys that directly ask employees how important pay is to them are
likely to overestimate pay,s true importance in employees actual decision.
Research findings: although 56 percent of the HR managers responding agreed with the
statement, the fact is that people are more likely to under-report the importance of pay than
to over report it.

18 | P a g e
 TOTAL RESPONDENT: 959

disagreed
44% Agreed
56%

Evidence that people under-report pay importance comes from two different
types of studies. One type compares individuals' direct self -reports of
importance with importance as inferred from their preferences for various job
descriptions. In such studies, pay has generally been found to be a
substantially more important factor when inf erred from participants' overall
evaluations of job attractiveness than from their direct reports of pay
importance.
A second type of study uses the psychological principle of projection to infer
how people evaluate characteristics that are heavily laden with social
desirability. 57 Based on applicants' self - reports, pay appeared to be the fifth
most important characteristic to men and seventh to women. How- ever, when
asked to rate the importance of those same ten attributes to "someone just
like yourself- same age, education, and gender," pay jumped to first place
among both men and women.58 In other words, people seem to believe that
pay is the most important motivator to everyone except themselves.

Real world examples: Studies of this type in the compensation area suggest that
pay is indeed an important motivator of behavior.
For example, Hilcorp Energy Company was founded in 1989 with the vision of being the
premier independent energy company in America. The Company manufactures oil,
petrol, and natural gas. Today, it is now the largest privately owned oil and natural gas
company in the country. Hilcorp is a company founded on the principles of innovation and
entrepreneurism. Their Core Values of "integrity, urgency, ownership, alignment, and
innovation" are central to everything we do and are fundamental to our culture.

Hilcorp Energy Company promised staff in 2010 that if the company doubles its production
rate and reserves by 2015, every employee will get a check for $100,000. An earlier met
goal rewarded 400 employees with $50,000 toward a new car.

19 | P a g e
Locke and col leagues' meta-analysis found the introduction of monetary
incentives to produce the largest and most reliable increases in job performance
(median = 30 percent} almost twice as large as the effects of goal setting or job
enrichment.

20 | P a g e