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Chapter 6: Selection and Hiring
Chapter Overview
Great companies often (and appropriately) credit their employees with their success. Once high
potential applicants have been recruited and formally apply for a job, the selection process
gathers and evaluates the information that will be used to determine who will be hired.
Learning Objectives
1. Describe the three types of fit between an employee and an organization.
2. Explain the difference between screening, evaluative, and contingent assessment
methods.
3. Describe the difference between structured, behavioral, and case interviews.
4. Describe the two ways of combining assessment scores.
5. Explain the factors that can influence the content of a job offer.
6. Explain the three types of fairness.
7. Describe the difference between implicit and explicit employment contracts.
Real World Challenge: How Zappos Hires the Right People

Building an effective culture is important for obtaining customer service and building a brand.
Zappos is interested in hiring only passionate, customer-oriented people who fit its fun-loving
culture. Cultural fit is a priority in the hiring process.
© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part
6-1
Chapter Outline
I. ASSESSMENT GOALS
The primary goal of assessment is to identify the people who best meet the organization’s
staffing goals, which usually include at a minimum high job performance and enhanced
business strategy execution.
A. Accuracy: The wider the range of talent in an applicant pool, the more important
it is that the assessment system accurately weed out the bad fits and identify the
good ones.
B. Fit: People need to fit the organization, workgroup, and job to be most successful.
1. Person–job fit is the fit between a person’s abilities and the job’s demands
and the fit between a person’s needs and motivations and the job’s
attributes and rewards.
2. Person–group fit, or the match between the person and his or her
workgroup and supervisor, is also important.
3. Person–organization fit is the fit between an individual’s values, attitudes,
and personality and the organization’s values, norms, and culture.
C. Ethics: The entire selection process should be managed ethically, including
explaining how assessment results will be used and how applicants’ privacy will
be protected.
D. Legal Compliance: Legally defensible hiring practices compare all applicants
using the same fair, consistent, and objective information predictive of job
success.
E. Positive Stakeholder Reactions: Meeting stakeholder needs, including those of
recruits, recruiters, and hiring managers, is another goal of the assessment
process.
II. ASSESSMENT METHODS

Job candidate assessment is usually done in waves.
A. Screening assessment methods are used to reduce the pool of job applicants to job
candidates.
B. Job candidates are then evaluated in more depth using evaluative assessment
methods to identify whom to hire.
C. Job offers may be made contingent on the results of contingent assessment
methods. If the contingent assessment (typically a background check, drug screen,
medical exam, etc.) is passed, then a formal job offer is extended.
Strategic Impact: Tailoring Assessment Methods at CashAmerica

When CashAmerica, a nationwide chain of over 1,000 loan and pawnshops, started evaluating
applicants using personality and behavioral assessments benchmarked against its current
employees, its turnover rate fell by 15 percent.
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D. Screening Assessment Methods
1. Résumés and cover letters provide information about an applicant’s skills,
education, and work experience.
2. Job applications require applicants to provide the same written
information about their skills, education, work experience, and other job
relevant information, making it easier to evaluate and compare them.
E. Evaluative Assessment Methods
1. Cognitive ability tests typically use computerized or paper-and-pencil tests
to assess general mental abilities, including reasoning, logic, and
perceptual abilities.
2. Noncognitive ability tests can also measure sensory and psychomotor
abilities. Sensory tests assess visual, auditory, and speech perception.
Speaking clearly, discriminating sounds, and seeing in low light are
examples of sensory abilities. Psychomotor tests assess strength, physical
dexterity, and coordination.
3. Personality and values assessments predict performance only for specific
occupations or criteria.
4. Integrity tests assess candidates’ attitudes and experiences related to their
reliability, trustworthiness, honesty, and moral character.
5. Job-knowledge tests measure the job-related knowledge (often technical)
required for success.
6. Interviews can assess a variety of characteristics, including interpersonal
skills, decision-making style, and leadership style.
a. Unstructured interviews ask varying questions across interviews
and usually lack standards for evaluating candidates’ answers.
b. Structured interview uses consistent, job-related questions with
predetermined scoring keys.
7. Work samples evaluate the performance of actual or simulated work tasks.
A work sample can be as simple as a situational judgment question asking,
“What would you do in this situation?” or as comprehensive as an actual
portfolio of the applicant’s previous work.
8. Assessment centers put candidates through a variety of evaluation
techniques to evaluate their potential fit with and ability to do the job.
HR Flexibility Feature: Personality Fit Differs across Jobs
Different jobs require employees with different combinations of skills, abilities, and personality
characteristics. It is important to understand which abilities and characteristics are related to job
success before assessing candidates using ability or personality.
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Case Study: Hiring at MITRE Corporation
MITRE employs over 7,000 scientists, engineers, and support specialists using a hiring process
can take up to three months and is described in detail on the company’s website.
1. What elements of MITRE’s hiring process do you find attractive? Which, if any, would
not appeal to you as a potential candidate? Explain your answers.
The hiring process at MITRE involves multiple steps, which is attractive as this provides
the candidate the opportunity to meet a variety of employees and have multiple previews
of the organization. This may also be a limitation as it is highly time consuming and can
take up to three months to complete.
2. Do you think that MITRE’s hiring process reinforces their image as a desirable
employer? Why or why not?
Their hiring process reinforces MITRE’s commitment to make the best possible selection
among the candidates interviewing for the position. This reinforces the selective nature of
the organization. If selected for a position at MITRE, the new employee would view this
as a desirable employer.
3. How else do you think MITRE should assess candidates? Explain your answer.
MITRE could also use prescreening assessments such as values and personality tests to
determine candidates that fit the organization culture. They could also focus on using
structured interviews to obtain consistent information across candidates.
F. Contingent Assessment Methods: A job offer is made contingent on the candidate passing
the contingent assessment. Reference checks, medical and drug checks, and background
checks are three of the most common contingent assessment methods.
1. Reference checks help companies learn about a candidate’s past
performance or confirm applicant-reported information.
2. Medical and drug tests should be used with care due to legal compliance
issues.
3. Background checks assess factors including personal and credit
characteristics, character, criminal history, and reputation.
III. CHOOSING WHOM TO HIRE

A. Combining Scores: Multiple predictors improve the prediction of job success; a
candidate’s scores on the different assessments must be meaningfully combined to
derive an overall score that can be compared across candidates or to a minimum
hiring standard.
1. Multiple hurdles mean that candidates must receive a passing score on an
assessment before being allowed to continue in the selection process
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2. Compensatory approach means that high scores on some assessments can
compensate for low scores on other assessments
B. Making a Final Choice: Cut scores and rank ordering can be used to identify
which finalists receive job offers.
1. A cut score is a minimum assessment score that must be met or exceeded
to advance to the next assessment phase or to be eligible to receive a job
offer
2. Rank order places candidates in order from highest to lowest score.
IV. MAKING THE JOB OFFER

A. What to Offer: Assessing the likely reaction of the job offer recipient is important,
and the offer should be created in a way that he or she will find maximally
appealing. The type of job as well as organizational, finalist, external, and legal
factors all influence the content of a job offer.
Global Issues Feature: Global Influences on Job Offer Content

When presenting or receiving a job offer in another country, it is helpful to learn about
the best way to receive compensation in that location.
B. Fairness Perceptions: Fairness perceptions influence candidates’ willingness to

accept job offers.
1. Distributive fairness is the perceived fairness of the outcomes received.
2. Procedural fairness is the perceived fairness of the policies and procedures
used to determine the outcome.
3. Interactional fairness reflects perceptions of the degree of respect and the
quality of the interpersonal treatment received during the decision-making
process.
C. Negotiating Employment Contracts: Salaries and employment contracts are often
negotiable, particularly for higher level jobs. The degree to which a job offer is
negotiable depends on the job, the hiring manager, the organization, and the
candidate’s perceived value to the organization.
Develop Your Skills Feature: Job Offer Negotiation Tips

Because employment is an ongoing relationship between the employee and the employer, it is
important that negotiating happen in a positive and open manner that leads to greater
understanding and win–win outcomes. Tips for negotiating are offered.
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V. THE EMPLOYMENT CONTRACT
A. An explicit employment contract is a written or verbal employment contract.
B. An implicit employment contract is an understanding that is not part of a written
or verbal contract.
VI. SUMMARY AND APPLICATION

The assessment and selection of job candidates is essential to getting the right talent in
the right place at the right time.
Real World Response: Hiring the Right People at Zappos

Online shoe retailer Zappos believes that protecting the company’s culture and adhering
to its core values is essential to the execution of its customer service strategy. Zappos
knows how important it is to hire employees who fit its unique culture; recruiters evaluate
candidates for culture fit and a willingness to change and to learn.
Appendix
Describes reliability and validity and why each is important in choosing selection methods.
Discussion Questions
1. Which do you think is more important in hiring an instructor, avoiding false positives
or avoiding false negatives? Why?
It depends on the type of job. Avoiding false positives is more important in high-risk jobs.
Avoiding false negatives are important when losing out on a good talent weakens a
company’s position and may strengthen the competitor position.
2. When you look for a job, how much relative focus to you put on person–job, person–
group, and person–organization fit? Why?
All three areas are particularly important as they all link with job satisfaction,
organizational commitment, and intent to stay with the organization.
3. Which evaluative assessment methods do you feel would be most appropriate to use in
hiring a recruiter? Why?
Examining résumés and cover letters would be the first step in the hiring process. Second,
cognitive ability testing could be used to ensure the level of cognitive ability. In addition,
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assessing personality such as extraversion could be important for this job as the individual
will be interacting with others as a regular aspect of the job.
4. Which evaluative assessment methods would you not want to be used in evaluating
you for a position? Why?
Students answer based on their own background and experiences.
5. What assessments might be appropriate to use in a multiple hurdles approach to

hiring university instructors? Why?
Multiple hurdles approach could involve examining résumés and cover letters as a first
hurdle. Second step could be a phone interview to screen the candidate. Third step could be
a work sample by asking the individual to teach one section of a class to see his/her
performance in the classroom.
6. How can organizations increase procedural and interactional fairness during the
hiring process?
Organizations can increase procedural fairness during the hiring process by developing
clear and fair policies and procedures. To increase interactional fairness, organizations
should be sure interviewers are not rude or unprepared as well as having those negotiating
contracts be reasonable and helpful.
7. What can you do to negotiate a higher job offer? Do you have any experiences,
qualifications, or other characteristics you might be able to use as leverage?
Be reasonable and respectful, and explain why you deserve the addition or why it will
improve your productivity. Don’t be competitive, be prepared with relevant information,
identify what you can and cannot part with and focus on what is most important, identify
and use leverage, manage your emotions, know what you would do if you can’t reach an
agreement, and reference your skills and accomplishments to demonstrate your
qualifications.
Personal Development Exercise

Job Offer Negotiation
Students negotiate a job offer. The Instructor should provide the following role play material for
the job offer negotiation exercise. One student is the job offer recipient and the other will be the
organizational representative. If time allows, students can switch roles and complete the second
negotiation exercise. The Teaching Note follows the four role plays and should NOT be
distributed to students.
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9B12C036A
JOB OFFER NEGOTIATION EXERCISE (A): MAXIMUM MOTIVATION

CANDIDATE INSTRUCTIONS
Eric Weinberg and Jean Phillips wrote this case solely to provide material for class discussion. The authors do not intend to illustrate
either effective or ineffective handling of a managerial situation. The authors may have disguised certain names and other identifying
information to protect confidentiality.
Richard Ivey School of Business Foundation prohibits any form of reproduction, storage or transmission without its written permission.
Reproduction of this material is not covered under authorization by any reproduction rights organization. To order copies or request
permission to reproduce materials, contact Ivey Publishing, Richard Ivey School of Business Foundation, The University of Western
Ontario, London, Ontario, Canada, N6A 3K7; phone (519) 661-3208; fax (519) 661-3882; e-mail cases@ivey.uwo.ca.
Copyright © 2012, Richard Ivey School of Business Foundation Version: 2012-09-20
It is the beginning of your final semester of undergraduate study, and you have been on the job market
seeking a management consulting position. Two weeks ago, you received a job offer from
PerformanceMax, detailed below. While it is a fair offer, you have not yet responded because you would
prefer to work for Maximum Motivation — a smaller, local, family-owned company known for treating its
employees well and its positive work atmosphere.
You have the opportunity to negotiate with Maximum Motivation to try to obtain an offer more attractive
to you than the one you have from PerformanceMax. You are, however, pressed for time; PerformanceMax
needs to know by tomorrow whether or not you will accept their offer, so you need to negotiate the best
offer you can with Maximum Motivation today.
Here are the terms of the job offer that were included in your PerformanceMax offer letter:
1. $61,0001 base salary.

2. Flexibility to choose four days to work in office and one at home.
3. $10,000 sign-on bonus.
4. Start date: June 1 (three weeks after graduation).
5. Five paid personal days in addition to standard paid time off package.
PerformanceMax’s salary offer of $61,000 is low, and you believe it is below the market average. The sign-
on bonus is above what you have heard is common for this type of position ($7,500). The additional paid
personal days off combined with some flexibility to choose one day per week to work from home are
extremely attractive features of the offer and will enable you to better balance work and life.
1
All currencies in US$ unless otherwise stated.
6-8
Your ideal situation is to work locally for Maximum Motivation with a high salary and a lot of vacation
time. In addition to future vacation time, you would like to have a month or more to relax (and celebrate)
after finishing your degree and before starting work.
You would consider accepting less flexibility and a lower sign-on bonus from PerformanceMax if they
would raise your salary and if you could move your start date out further.
Look over the payoff matrix on the next page to identify your priorities and their relative values to you.
Both companies offer comparable health benefit packages; similar 401(k) plans; and 10 personal days.
These items are non-differentiating factors between the two companies and are non-negotiable.
After reviewing the point schedule and preparing to negotiate, let the representative know that you are
ready. Allow the company representative to open the discussion by presenting an initial offer. Remember,
you would prefer to get the job with Maximum Motivation, but you do have an acceptable alternative.
Although all of the details of the PerformanceMax offer are not known, you have estimated the overall
value of working there to be at least 2000 points. If you cannot negotiate a deal with Maximum Motivation
worth more than 2000 points to you, you will accept the job at PerformanceMax instead.
Do not let your negotiation partner see your point schedule, on the next page. Use the scenario and
information above and your own creativity to play your role in this negotiation.
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MAXIMUM MOTIVATION CANDIDATE (A) POINT SCHEDULE
*CONFIDENTIAL*
DO NOT SHOW THIS TO YOUR NEGOTIATION PARTNER!
Your individual point total must be at least 2000 points to reach an agreement
Base Salary Flextime

$75,000 2500 2 days/week, Hire Choice 1250
$70,000 2000 2 days/week, Firm Choice 750
$65,000 1500 1 day/week, Hire Choice 750
$60,000 -500 1 day/week, Firm Choice -750
$55,000 -1750 None Can’t Accept
$50,000 Can’t Accept
Additional Paid Time Off (Personal Days)
Time Between Graduation and Start Date 6 days 800
3 months 2500 5 days 600
2 months 1500 4 days 400
1.5 months 1125 3 days 200
1 month 750 2 days 0
3 weeks 375 1 day -200
2 weeks 0 0 days -400
Time Until First Performance Review Office

2 months 1000 Corner, windows, high floor 500
3 months 750 Own office with window 400
4 months 200 Own office without window 200
6 months -100 Shared office 100
12 months -500 Cubicle -250
Cash Sign-On Bonus Computer

$15,000 2250 New, top of the line 250
$12,000 1350 New, moderate quality 100
$10,000 750 Refurbished -100
$7,500 0
$5,000 -800 Cell Phone
$2,000 -1700 New smartphone, with data plan 1000
$1,000 -2000 New smartphone, no data plan 800
$0 Can’t Accept Refurbished smartphone, with data plan 450
Refurbished smartphone, no data plan 100
Date Sign-On Bonus Paid No Phone -500
All in 1st paycheck 1500
½ in 1st paycheck; ½ in 1 year 200
All in 1 year -500
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9B12C036B
JOB OFFER NEGOTIATION EXERCISE (B): MAXIMUM MOTIVATION

REPRESENTATIVE INSTRUCTIONS
You are the job offer negotiation representative for Maximum Motivation. Your company would really like
to hire your top candidate, who you are about to meet with to negotiate a job offer. You are aware that the
candidate has another job offer from your rival, PerformanceMax. You will need to negotiate effectively to
keep the offer in your company’s best interest, but still hire your top choice.
Although you do not know the details of PerformanceMax’s offer, you do know that their strategy is low
salaries and high sign-on bonuses. Maximum Motivation is a smaller, family-owned company that must
avoid financial risks such as high sign-on bonuses and paying the sign-on bonus up front. Offering
additional time off and reasonable flexible working arrangements are more in line with its motivation
strategy and talent philosophy.
You have some negotiating flexibility, but are still bound by company policies, reflected by the options on
the point schedule. The person who is in charge of approving final hiring decisions is intent on preventing
risk and managing costs, including payroll. Industry data you have available estimates the market rate for
this position to be approximately $64,000.2 In addition, you are unable to offer more than $70,000 and you
should keep in mind that a salary lower than $55,000 is not preferable since the employee will likely feel
underpaid and either leave or demand a raise within a few months.
Your company needs to replace a consultant who is leaving for another opportunity on May 20, just over
one week after this candidate’s graduation. You would prefer to minimize the time that the position is left
open, and you are not willing to wait past the end of June for a replacement.
Maximum Motivation has a very cooperative and flexible atmosphere. You have developed a culture in
which employees are happy to cover for each other and help with each other’s clients. Partly for this reason,
you very much prefer to have employees in the office every day. However, you have learned that allowing
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employees to work from home one day per week of their choice drastically improves morale and their
commitment to the organization.
Note Maximum Motivation offers all new hires for this type of role the same 401(k) and health benefits
package. The law requires you to offer a minimum of 10 personal vacation days. All three of these items
are non-negotiable, and your compensation department has informed you these benefits for both Maximum
Motivation and PerformanceMax are practically the same.
Look over the payoff matrix on the next page to identify your priorities and their relative values to your
company. Use as many of these items as you choose to put together a starting job offer to open the
negotiation discussion. When you are both ready, present your job offer and start negotiating.
Remember, this candidate is your first choice. However, the terms of the final agreement must be worth at
least 2000 points to your company. If you cannot negotiate a deal worth more than 2000 points with the
candidate, the agreement will not be approved. Any combination of job offer terms worth less than 2000
points to Maximum Motivation is invalid.
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MAXIMUM MOTIVATION REPRESENTATIVE (B) POINT SCHEDULE
*CONFIDENTIAL*
Base Salary Flextime

$50,000 1000 None 1000
$55,000 1500 1 day/week, Hire Choice 750
$60,000 1000 1 day/week, Firm Choice 500
$65,000 -500 2 days/week, Firm Choice -250
$70,000 -1250 2 days/week, Hire Choice -750
$75,000 Can’t Accept
Additional Paid Time Off (Personal Days)
Time Between Graduation and Start Date 0 days 800
2 weeks 1500 1 day 600
3 weeks 1125 2 days 400
1 month 750 3 days 200
1.5 months 375 4 days 0
2 months 0 5 days -200
3 months Can’t Accept 6 days -400
Time Until First Performance Review Office

12 months -500 Cubicle 500
6 months 600 Shared office 400
4 months 750 Own office without window 200
3 months 250 Own office with window 100
2 months Can’t Accept Corner, windows, high floor -250
Cash Sign-On Bonus Computer

$0 3750 Refurbished 250
$1,000 2750 New, moderate quality -100
$2,000 2000 New, top of the line -500
$5,000 0
$7,500 -750 Cell Phone
$10,000 -1500 No Phone 1000
$12,000 -2500 Refurbished smartphone, no data plan 500
$15,000 -4000 Refurbished smartphone, with data plan -100
New smartphone, no data plan -300
Date Sign-On Bonus Paid New smartphone, with data plan -500
All in 1 year 750
½ in 1st paycheck; ½ in 1 year -100
All in 1st paycheck -1000
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9B12C036C
JOB OFFER NEGOTIATION EXERCISE (C): PEOPLE POWER

CANDIDATE INSTRUCTIONS
It is the beginning of your final semester of undergraduate study, and you have been on the job market
seeking a management consulting position. Two weeks ago, you received a job offer from
PerformanceMax, detailed below. While it is a fair offer, you have not yet responded because you would
prefer to work for People Power — a larger, better performing, and faster growing company with a
reputation in the industry for offering variety and skill development in its entry-level positions.
You have the opportunity to negotiate with People Power to try to obtain an offer more attractive to you
than the one you have from PerformanceMax. You are, however, pressed for time; PerformanceMax needs
to know by tomorrow whether or not you will accept their offer, so you need to negotiate the best offer you
can with People Power today.
Here are the terms of the job offer that were included in your PerformanceMax offer letter:
1. $68,0003 base salary.

2. Located in the Midwest.
3. $1,000 sign-on bonus paid at the time of signing.
4. $3,000 relocation assistance.
5. Annual Target Bonus: 8 percent of base pay.
PerformanceMax’s salary offer of $68,000 is very generous and you are aware that it is above market
average. Eligibility in their annual bonus program is also a valuable added incentive. However, the sign-on
bonus and relocation assistance are not as generous, and you would prefer not to work in the Midwest.
You would like to live in the Northeast, near your family, and do not want to relocate internationally or live
in the cold and snowy Midwest. You would really like a cash sign-on bonus of at least $7,500 paid as
3
6-14
quickly as possible to enable you to spruce up your wardrobe and pay off your student loans. You have also
heard $7,500 is a common sign-on bonus for this type of position.
You would consider accepting a lower salary offer from People Power if some of your other interests can
be better met compared to the offer from PerformanceMax.
Look over the payoff matrix on the next page to identify your priorities and their relative values to you.
Both companies offer comparable health benefit packages, similar 401(k) plans, and 10 personal vacation
days. These items are non-differentiating factors between the two companies and are non-negotiable.
After reviewing the point schedule and preparing to negotiate, let the representative know that you are
ready. Allow the company representative to open the discussion by presenting an initial offer. Remember,
you would prefer to get the job with People Power but you do have an acceptable alternative. Although all
of the details of the PerformanceMax offer are not known, you have estimated the overall value of working
there to be at least 2000 points. If you cannot negotiate a deal with Maximum Motivation worth more than
2000 points to you, you will walk away and accept the more attractive job at PerformanceMax.
6-15
PEOPLE POWER CANDIDATE (C) POINT SCHEDULE
*CONFIDENTIAL*
Base Salary Location

$75,000 2500 Northeast 1250
$70,000 2000 West Coast 750
$65,000 1500 South 750
$60,000 -500 Midwest -750
$55,000 -1750 Mexico City -1500
$50,000 Can’t Accept London Can’t Accept
Annual Bonus Target Relocation Assistance

10% of Base Pay 1500 $10,000 1000
8% of Base Pay 1125 $7,000 700
5% of Base Pay 750 $5,000 500
2% of Base Pay 375 $3,000 -100
None 0 $2,000 -500
$1,000 -650
Time Until First Performance Review $0 -750
2 months 1000
3 months 750 Office
4 months 200 Corner, windows, high floor 500
6 months -100 Own office with window 400
12 months -500 Own office without window 200
Shared office 100
Cash Sign-On Bonus Cubicle -250
$15,000 2250
$12,000 1350 Computer
$10,000 750 New, top of the line 250
$7,500 0 New, moderate quality 100
$5,000 -800 Refurbished -100
$2,000 -1700
$1,000 -2000 Cell Phone
$0 Can’t Accept New smartphone, with data plan 1000
New smartphone, no data plan 800
Date Sign-On Bonus Paid Refurbished smartphone, with data plan 450
All in 1st paycheck 1500 Refurbished smartphone, no data plan 100
½ in 1st paycheck; ½ in 1 year 200 No Phone -500
All in 1 year -500
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9B12C036D
JOB OFFER NEGOTIATION EXERCISE (D): PEOPLE POWER

REPRESENTATIVE INSTRUCTIONS
You are the job offer negotiation representative for People Power. Your company would really like to hire
your top candidate, who you are about to meet with to negotiate a job offer. You were recently made aware
that the candidate has another job offer from your rival, PerformanceMax. You will need to negotiate
effectively to keep the offer in your company’s best interest, but still hire your top choice.
Although you do not know the details of PerformanceMax’s offer, you do know their strategy is to offer
high salaries at the expense of other benefits. People Power’s business and talent strategy, on the other
hand, centers on developing and investing in its people while offering competitive and fair market rates.
You have some negotiating flexibility, but are still bound by company policies (reflected by the options on
the point schedule). The hiring manager is also concerned about internal equity, and would prefer the salary
be kept close to the market value which your compensation department has estimated to be approximately
$64,0004 based on external survey data. In addition, you are unable to offer more than $68,000 and you
should keep in mind that a salary below $55,000 is not preferable since the employee will likely feel
underpaid and either leave or demand a raise within a few months.
Your company has paid sign-on bonuses in the past, but is trying to eliminate this practice as it does not
feel that it is necessary in the current economic climate. People Power also believes in developing its
employees and would like to give employees their first performance review and opportunity for a raise
within four to six months of their starting date.
The company also believes in pay for performance, although it tries to limit the variable component of a
person’s salary to a reasonable level. People Power doesn’t generally see a need for entry-level consultants
to use a cell phone for work very often, and feels that most employee cell phone use is of a personal rather
than business nature.
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Note People Power offers all new hires for this type of role the same 401(k) and health benefits package.
In addition, all employees receive 10 personal days. All three of these items are non-negotiable, and your
compensation department has informed you these benefits for both People Power and PerformanceMax are
virtually identical.
Look over the payoff matrix on the next page to identify your priorities and their relative values to your
company. Then, put together a starting job offer to open the negotiation discussion. It is not necessary to
include all 10 items when presenting your offer. When you are both ready, present your job offer to the job
candidate and start negotiating.
Remember, this candidate is your first choice. However, the terms of the final agreement must be worth at
least 2000 points to your company. If you cannot negotiate a deal worth more than 2000 points with the
candidate, the agreement will not be approved by the compensation department. Any combination of job
offer terms worth less than 2000 points to People Power is invalid.
Do not let your negotiation partner see your point schedule, on the next pages. Use the scenario and
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PEOPLE POWER REPRESENTATIVE (D) POINT SCHEDULE
*CONFIDENTIAL*
Base Salary Location

$50,000 1000 London 1000
$55,000 1500 Mexico City 1000
$60,000 1000 West Coast 750
$65,000 -500 Midwest 500
$70,000 -1250 South -250
$75,000 Can’t Accept Northeast -750
Annual Bonus Target Relocation Assistance

None 1500 $0 1000
2% of Base Pay 1125 $1,000 700
5% of Base Pay 750 $2,000 400
8% of Base Pay 375 $3,000 100
10% of Base Pay 0 $5,000 0
$7,000 -300
Time Until First Performance Review $10,000 -750
12 months -500
6 months 600 Office
4 months 750 Cubicle 500
3 months 250 Shared office 400
2 months Can’t Accept Own office without window 200
Own office with window 100
Cash Sign-On Bonus Corner, windows, high floor -250
$0 3750
$1,000 2750 Computer
$2,000 2000 Refurbished 250
$5,000 0 New, moderate quality -100
$7,500 -750 New, top of the line -500
$10,000 -1500
$12,000 -2500 Cell Phone
$15,000 Can’t Accept No Phone 1000
Refurbished smartphone, no data plan 500
Date Sign-On Bonus Paid Refurbished smartphone, with data plan -100
All in 1 year 750 New smartphone, no data plan -300
½ in 1st paycheck; ½ in 1 year -100 New smartphone, with data plan -500
All in 1st paycheck -1000
6-19
S w
8B12C036
Teaching Note
JOB OFFER NEGOTIATION EXERCISE
Eric Weinberg and Jean Phillips wrote this teaching note as an aid to instructors in the classroom use of the cases Job Offer
Negotiation Exercise (A), (B), (C) and (D), Nos. 9B12C036A, 9B12C036B, 9B12C036C and 9B12C036D. This teaching note should
not be used in any way that would prejudice the future use of the case.
The purpose of this role play activity is to give participants the opportunity to experience a job offer
negotiation as both the job candidate and the employer. Materials are available to conduct two unique job
offer negotiations, allowing participants the opportunity to play both roles and to practice and apply
concepts and skills learned in the first negotiation session. If desired, only one of the two exercises can be
done if only one hour is available for the activity.
The exercise addresses a variety of topics and skills related to negotiation, influence, persuasion,
communication, emotional intelligence, planning and conflict resolution skills. The activity also gives
participants the opportunity to practice negotiating the details of a job offer. The activity is useful in staffing,
human resource management, principles of management, organizational behavior, and negotiation classes
and workshops. It has been used successfully at both the undergraduate and graduate levels.
It takes approximately one hour for participants to complete one role play and 20 minutes to conduct the
debriefing and discussion. This can be cut to 50 minutes for the exercise and 10 minutes for the discussion
if necessary. If both scenarios are used to give participants the opportunity for additional practice and to
apply concepts learned in the first session, the discussion should ideally be held twice to maximize learning
and skill development.
EXERCISE SYNOPSIS
The exercise contains two distinct negotiation scenarios. One scenario occurs for a job with a company
called People Power and the other is for a job with a company called Maximum Motivation. The exercise’s
authors recommend facilitating both scenarios, especially for human resource management and staffing
courses. However, each scenario has been designed as an effective tool when used alone in order to meet
time constraints. If facilitating both role play scenarios, they may be used in any order. If facilitating one,
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select only one of the two scenarios for all participants to use (either People Power or Maximum
Motivation).
Participants work in pairs, with one playing the role of the job candidate and the other the role of the
company representative. In both scenarios, the company considers the candidate to be the top applicant and
would very much like to finalize the hire. In both scenarios, the job candidate has an acceptable alternative
— another job offer from a rival company called PerformanceMax — and needs to accept or decline the
PerformanceMax offer the next day. It is important that both sides reach an acceptable employment
arrangement during this negotiation, or the candidate will not be hired. When the two sides have negotiated
an acceptable agreement, or when either the candidate or the company representative decides to end the
negotiation, the negotiation is over.
Participants must negotiate a deal worth at least a specified minimum number of points to each party in
order to reach a deal. When the negotiation has ended, both partners record their final individual and joint
point totals for later group discussion and give each other feedback. After the group discussion of the first
negotiation session, participants find a different partner who last played the opposite role, switch roles, and
complete the other negotiation scenario with a different partner while playing the opposite role. It is also
possible to conduct the two role play sessions on different days, giving participants instructions to prepare
their offers, set goals, and plan negotiation strategies before the next session.
SUGGESTED TEACHING APPROACH
Your role as facilitator of this exercise begins with creating an environment for negotiation and explaining
a set of basic boundaries. Next, you will take a step back to enable the participants to have the freedom and
flexibility to be creative in this activity and practice their skills. After delivering an initial set of instructions,
you will be minimally involved in the negotiation, but after the activity completes, you should conduct a
discussion highlighting some key points of interest and lessons that can be learned from the activity to
facilitate learning and skill development.
After pairing negotiation partners together, ensure the pairs have the opportunity to spread out around the
room. This activity tends to involve lively, active discussion. It is better if participants are not distracted or
influenced by conversations or negotiations going on right next to them.
Help the participants “get into character” by explaining to them the relevance and importance of the activity.
If possible, embellish the given scenario to relate to the participants’ current situation. Make the
hypothetical situation seem as realistic and relatable as possible. Remind the participants the objective is
not necessarily to score the most individual points, because in order to “win” the other party must feel that
he/she “won” as well.
Then explain the rules and boundaries of the activity.
 Participants have a limited set of information and detail available to them, and are free to be creative
and embellish their stories and interests as appropriate.
 Explain that not all negotiations will be successful — and this is okay. Remind participants to pay
attention to their BATNA’s (best alternative to a negotiated agreement). The point levels related to each
participant’s BATNA are provided as part of each scenario. These numbers are fixed; any deal in which
either party has lower than their BATNA number is invalid. It is as if they never came to an agreement.
 Participants may not share their point schedules or current point totals, but are encouraged to share
other information as they choose based on what they feel is appropriate or the best negotiation strategy.
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 Give the participants 10 minutes to prepare and 30–40 minutes to come to an agreement, or the deal is
off. Participants must be sure to take the time to confirm, review and finalize all terms of the deal in
writing before informing the facilitator of their final scores.
At the beginning of the activity both the job candidate and company representative are given a confidential
role description for their role and a payoff matrix that should not be shared with the negotiating partner.
The role description identifies the negotiation priorities for each person. The payoff matrix reflects the
points awarded for different levels of each negotiation factor (salary, sign-on bonus, relocation assistance,
etc.) for that role. The point values differ for each partner. Each side must negotiate a job offer worth at
least 2,000 points to them (4,000 combined points) in order to secure a final deal. If the minimum 2,000
point value is not met by both parties, the candidate is not hired.
If there are no questions, participants should read their personal scenarios, familiarize themselves with their
point schedules, and take a few minutes to set goals and think of a negotiation strategy before beginning. If
time constraints are an issue, encourage participants to spend five minutes preparing and 20–30 minutes
negotiating (Note: the preparation step of negotiation is important to learning about the importance of
planning and should not be skipped).
Avoid answering questions that may come up and point the participants back to the limited information
they have for an answer; if it isn’t in there, it is up to them to be creative. Give participants regular reminders
of the time remaining, the minimum acceptable point score, and each side’s BATNA constraint.
Time Needed for Activity
 Set-up and Instructions: 5–10 minutes

 Participants’ Individual Preparation Time: 5–10 minutes
 Negotiation (and collect results as groups finish) 40–50 minutes
 Debrief Discussion 10–20 minutes
Total 60–90 minutes for one; 120–180 minutes for both
SUGGESTED DISCUSSION QUESTIONS
The following is a sample of lessons learned and key takeaways provided by this activity. Often, participants
will recognize many if not all of these points and will bring them up during the discussion. This sample list
of possible discussion questions is included as a guide to just some of the points you may want to highlight
or emphasize:
1. Which individuals negotiated the highest individual payoffs? Which partners negotiated the
highest joint payoff? Why do you feel these outcomes occurred?
Collaborative (integrative) negotiation should result in higher joint payoffs than competitive (distributive)
negotiation. Negotiating an employment arrangement requires both partners to work together to achieve a
mutually optimized agreement. Asking the partners of the participants who received the highest individual
payoffs how they felt during and after the negotiation can help to illustrate the benefits of a collaborative
negotiation strategy. Did these partners feel taken advantage of, betrayed, or tricked due to the competitive
strategy of their partners?
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Discussing which negotiation tactics led to the higher individual and joint payoffs can also illuminate the
processes that lead to different negotiation outcomes and help participants reflect on what were the most
and least successful negotiation, persuasion and influence tactics. Identifying whether these tactics would
be equally successful across all partners also highlights the importance of strategy and flexibility in
negotiations.
During this discussion, it is valuable to mention that the highest possible combined payoff is 8,000. Joint
scores close to this number are quite rare, but are more likely with pairs who engage in a post-negotiation
collaborative review. That is, after coming to a preliminary agreement, both parties agree to take a few
minutes to consider if slight modifications would be mutually desirable. When this strategy is exercised,
both sides obtain not just a higher point total, but also reinforce trust and optimism toward a future
relationship with each other.
2. Describe your approach to the first negotiation. How did you plan your strategy? Why did it
work or not work?
Personal style differences in offer planning, negotiation strategy, and influence and persuasion tactics can
illustrate how negotiation skills can be improved with training and practice. Differences in how participants
identified the most/least important points of negotiation for the other party to maximize each side’s “wins”
can illustrate the importance of communication skills.
Linking answers to this question with participants’ answers to the previous question can highlight the
importance of planning and strategy to negotiation outcomes. Participants who start with more extreme
positions typically end up with higher payoffs. It is often worthwhile to have an extreme initial offer, even
if it seems unrealistic. Otherwise, the negotiation zone (range between initial offer and BATNA) is
prematurely cut short. Further, there is a chance the other side might not think it is unfair or unrealistic, and
might agree to it. Another often effective tactic is to act as if some issues that are not as important actually
are significant, using these minor issues to gain concessions on more important concerns. Volunteering
information to establish trust, asking directly what the most important issue is for the other side, and waiting
for the other side to make the first offer are also strategic approaches that participants found to be successful.
Discussing how participants adapted their strategy to the negotiation style of their partner can illustrate the
importance of collaboration and flexibility.
One additional key tactic is threatening to walk away. When used at the right time, this is a common and
very powerful strategy that capitalizes on the other side’s escalation of commitment (continuously
increasing commitment and desire to come to a deal that results from a person’s desire not to “give up”
after all the time and effort that has already been invested and feel as if he or she failed the exercise).
3. What influence tactics did you try? How well did they work and why?
Asking participants to indicate which of the following influence tactics they tried and how each worked can
illustrate the appropriate and inappropriate usage of each:
 Personal appeals: asking for a personal favor.

 Rational persuasion (or reason): using logic and facts to persuade the partner.
 Coalition tactics: referring to the support of others to convince the partner to agree to a proposal or to
change his or her attitude toward something, such as the benefits of flextime or a smart phone with a
data plan.
6-23
 Consultation: requesting the partner’s advice and being willing to modify the offer based on the
person’s concerns and suggestions.
 Exchange: offering to exchange something of value now or in the future for the partner’s cooperation
 Pressure: using coercion or persistent follow-up or reminders to gain influence.
 Ingratiation: flattering or praising the partner to put them in a good mood or make them more likely to
want to help.
 Inspirational appeals: appealing to the partner’s aspirations, values and ideals to gain their agreement.
 Legitimating tactics: enhancing one’s formal authority to make a certain request by referring to rules,
precedents or official documents.
Participants often refer first to rational persuasion and exchange, but it is common for most of these tactics
to have been tried during the negotiation session with different results for different people and situations.
The potential negative effects of pressure can be discussed as well.
4. What conflict management strategies did you use when you and your partner reached an
impasse? How well did they work and why?
 Collaborating: reflects a high concern for your own interests and a high concern for the interests of the
other party; this conflict management style emphasizes problem solving and pursues an outcome that
gives both partners what they want.
 Compromising: each side sacrifices something in order to end the conflict; this style reflects a moderate
concern for your own interests and a moderate concern for the interests of the other party.
 Competing: reflects a high concern for your own interests and low concern for the other party (e.g., “If
you don’t accept this offer the deal is off”); since one party is trying to dominate the other this conflict
management style can escalate the conflict and the loser may try to retaliate.
 Accommodating: reflects a low concern for your own interests and a high concern for the interests of
the other party; this conflict management style is generally used when the issue is more important to
the other party than it is to you.
 Avoiding: ignoring the conflict or denying that it exists; this style reflects a low concern for your own
interests and a low concern for the interests of the other party; the primary drawback to this style is that
the decision may not be optimal to you and your interests.
Across a group of participants at least one example of each strategy can usually be discussed. As there is
no single best conflict management strategy, this allows a rich discussion of the appropriate and
inappropriate use of each strategy.
5. (If applicable) Which ideas or tactics that you learned after completing this activity the first time
were you able to apply the second time? How did they improve the results of the negotiation?
Participants often mention the importance of planning, creating a first offer with room for negotiation, and
better communication with their partner. Performing the exercise a second time gives participants the
opportunity to improve their tactics and negotiation skills and often leads to additional insights. The
importance of the planning stage can be discussed here, in terms of gathering the information needed to
create a good first offer, understanding one’s BATNA, and strategizing how best to persuade and influence
one’s partner.
6-24
Attempts to implement some of the strategies mentioned above, such as threatening to walk away, often
have mixed results with a group that has engaged together in discussing it. However, pairs that choose to
engage in a post-negotiation collaborative review consistently achieve higher scores.
Emotional intelligence skills and emotion management skills are often focused on more in the second
negotiation session than the first as the importance of interpersonal skills often becomes clear during the
first session. Asking what participants did when they felt their partner was getting frustrated can stimulate
a good discussion of the importance of emotional regulation and emotional intelligence in negotiations as
well as appropriate tactics to manage this situation.
Asking participants if they tried any tactics that worked in one negotiation but not the other can stimulate a
discussion of how it is not just the content of a negotiation, but also the interpersonal process that influences
negotiation outcomes.
6. What would have helped you negotiate more effectively? More time? More information? What
would you do differently if you were to do the negotiation again?
The discussion around this question often focuses on the importance of planning, strategy development,
and better understanding the partner’s needs and negotiating position. The information typically requested
includes more planning time and additional negotiation factors to use to create a mutually acceptable
agreement. Creating a good first offer with negotiation room is often identified as important to maximizing
the joint payoff.
SUMMARY OF KEY DISCUSSION POINTS AND LESSONS LEARNED
 The difference between an integrative, collaborative approach versus a distributive, competitive (fixed
pie) focus and how it was reflected in different negotiating pairs’ interactions.
 The importance of recognizing BATNA, identifying the negotiation zone, and obtaining information
from the negotiation partner.
 The value of re-visiting issues as well as the “final” deal (through a post-negotiation collaborative
review) to see if any last minor changes can be made that are beneficial to both sides.
 The importance of planning, communication, influence, persuasion, conflict management and
emotional intelligence skills during a negotiation.
 The impact of threatening to walk away as well as understanding and detecting escalation of
commitment.
6-25
Strategic HRM Exercises
Selecting Servers
Students imagine they are the manager of Pizza Palace and need to hire servers for the new
location using low-cost methods. What assessment methods would you use and in what order?
How would you make a final hiring decision? What would be some of the key elements in your
job offer?
The assessment methods include résumés and cover letters as well as structured interviews.
Additionally, work samples could be used asking candidates to spend an hour working at the
pizza palace. Final hiring decisions will be made based on the results of the interviews and work
samples. Key elements of the job offer will include competitive salary based on the average in
the area as well as extra benefits such as free pizza.
Now imagine that you are the manager of Haute Cuisine, the fanciest restaurant in your nearest
city. Servers are career professionals. What assessment methods would you use to hire servers
and in what order? How would you make a final hiring decision? What would be some the key
elements in your job offer?
Hiring in this context will include first screening resumes and cover letters to determine
candidates with similar prior experience. These candidates will then be interviewed using a
structured interview technique as well as completing a values and personality assessment to
identify fit with the work environment and personality to work effectively with customers.
Finally, work samples will be completed by having candidates work one shift at the restaurant to
assess effectiveness. Key elements of the job offer include salary and benefits such as health care
and retirement. Additional benefits such as time off and restaurant food access are possible.
The two setting differ with regard to the need for prior experience and demonstrated skills to be
effective. The fancy restaurant is in need of a seasoned experienced server that will be effective
as a long-term hire.
Evaluating Personality Assessments

Evaluate the pre-employment personality assessment providers on two web sites and answer the
questions.
1. What are the strengths and limitations of each?
Both organizations offer a variety of assessment tools for selecting applicants based on
cognitive ability and personality as well as knowledge assessment and simulations. The con
of these organizations is that the assessments are already prepared and not specifically
tailored to the specific focus of the organization.
6-26
2. How would each of the two vendors be best used in candidate assessment?
Both vendors allow for selection of the best tools to use that focus on the specific needs of the
job position. Organizations can select the tools to match the needs of the job position.
3. Think of a job you would like to someday hold. Drawing from these websites, if you wanted
to assess personality when hiring for this position, what personality characteristics would you
use?
Students answer this based on their own career goals.
Practice Interview
Students watch two interviews on YouTube and then discuss the job and organization they are
interested in with a partner. The partner thinks of some good structured interview questions.
Students practice interviewing each other and also work on both the interviewer and interviewee
skills. Students then give each other feedback.
Whom Would You Hire?
Students work with a structured interview format to create a scoring key for the three interview
questions and assess three job candidates’ performance by viewing interview videos on the
website. After scoring the interviews, the student determines who receives the job offer. Students
write a one-page paper explaining the hiring choice.
Integrative Project
Students continue working on their project from the prior chapters. They now focus on
developing a selection plan and job offer strategy for their chosen job. Students explain the
assessment methods and scoring system used make the hiring decision. Students then write a job
offer letter to the candidate that presents a valid job offer and attempts to persuade the candidate
to accept.
Now What? Video Cases
1. Which aspects of HRM discussed in this chapter are illustrated in these videos?
Explain your answer.
The following topics of HRM were discussed in the videos: Interview process; legal
compliance; assessment system including work samples, phone screening; and structured
standardized interviews.
6-27
2. How much discretion do you think hiring managers should have in conducting their
interviews? Explain your answer.
Hiring managers should be given some common structured interview questions and then
allow them to add in other questions. Hiring managers should also be given some training on
how to effectively conduct structured interviews.
3. As a manager at Happy Time Toys, what other suggestions would you make about how
to best manage the interview process?
In addition to standardized structured interview questions, hiring managers should also be

trained on ethical issues and legal compliance that need to be considered in the interview
process.
6-28

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Solution Manual for Human Resource Management 1st

Edition Phillips Gully 1111533555 9781111533557

Chapter 6: Selection and Hiring

Real World Challenge: How Zappos Hires the Right People

II. ASSESSMENT METHODS

Strategic Impact: Tailoring Assessment Methods at CashAmerica

HR Flexibility Feature: Personality Fit Differs across Jobs

III. CHOOSING WHOM TO HIRE

IV. MAKING THE JOB OFFER

Global Issues Feature: Global Influences on Job Offer Content

B. Fairness Perceptions: Fairness perceptions influence candidates’ willingness to

Develop Your Skills Feature: Job Offer Negotiation Tips

VI. SUMMARY AND APPLICATION

Real World Response: Hiring the Right People at Zappos

Students answer based on their own background and experiences.

5. What assessments might be appropriate to use in a multiple hurdles approach to

Personal Development Exercise

JOB OFFER NEGOTIATION EXERCISE (A): MAXIMUM MOTIVATION

Copyright © 2012, Richard Ivey School of Business Foundation Version: 2012-09-20

1. $61,0001 base salary.

Base Salary Flextime

Time Until First Performance Review Office

Cash Sign-On Bonus Computer

JOB OFFER NEGOTIATION EXERCISE (B): MAXIMUM MOTIVATION

Copyright © 2012, Richard Ivey School of Business Foundation Version: 2012-09-20

Base Salary Flextime

Time Until First Performance Review Office

Cash Sign-On Bonus Computer

JOB OFFER NEGOTIATION EXERCISE (C): PEOPLE POWER

Copyright © 2012, Richard Ivey School of Business Foundation Version: 2012-09-20

1. $68,0003 base salary.

Base Salary Location

Annual Bonus Target Relocation Assistance

JOB OFFER NEGOTIATION EXERCISE (D): PEOPLE POWER

Copyright © 2012, Richard Ivey School of Business Foundation Version: 2012-09-20

Base Salary Location

Annual Bonus Target Relocation Assistance

JOB OFFER NEGOTIATION EXERCISE

Copyright © 2012, Richard Ivey School of Business Foundation Version: 2012-09-20

SUGGESTED TEACHING APPROACH

Then explain the rules and boundaries of the activity.

Time Needed for Activity

 Set-up and Instructions: 5–10 minutes

SUGGESTED DISCUSSION QUESTIONS

 Personal appeals: asking for a personal favor.

SUMMARY OF KEY DISCUSSION POINTS AND LESSONS LEARNED

Evaluating Personality Assessments

1. What are the strengths and limitations of each?

Students answer this based on their own career goals.

Whom Would You Hire?

Now What? Video Cases

In addition to standardized structured interview questions, hiring managers should also be

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