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BU121 Final Exam Study Guide

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Laura Allan

B U 1 2 1 F i n a l E x a m N o t e s E d w i n a C h e u n g | 1 FINANCE (24 MARKS) LECTURE MATERIAL: WEEKS 7-9 (4 MARKS SA) Analytical Measures at Different Stages - Different analytical measures are important to different users at different stages - Different measures as there are different concerns at different stages Life cycle stage Type of financing Financial ratios and Users of financial ratios measures and measures Development & start-up -Seed financing -Cash burn ratios -Entrepreneur stages -Start up financing -Liquidity ratios -Business angels -Conversion period ratios -Venture capitalists (VCs) Survival stage -First-round financing -Cash burn ratio -Entrepreneur -Liquidity and conversion -Business angels -Leverage ratios -Venture capitalists (VCs) Rapid-growth stage -Second-round financing -Leverage ratios -Entrepreneurs, angels, -Mezzanine -Profitability ratios and VCs -Liquidity-stage financing -Efficiency ratios -Commercial and investment banks - Cash burn rate – how quickly the venture uses cash - Liquidity – the venture’s ability to meet short-term financial obligations o Helps you evaluate how you’re managing the working capital o Measuring the trend over time - Conversion period – the length of time of the operating/working capital cycle o Time to convert an assert into cash - Leverage – implications relating to the use of debt - Profitability and efficiency o How productive are you? Analytical techniques - Industry comparable analysis – compare against the industry average o If going into new industry, the data will be hard to get so compare to competitors - Cross-sectional analysis – compare to specific firms - Trend analysis – compare to your own company over time Operating and Financial Leverage – Pros and Cons Debt (financial leverage) Equity (operating leverage) Interest/Dividends Pays interest Pays dividends Cost of capital Lowinterest is tax deductible Higherdividends are taken off bottom line Return Higher return to company (tax- Lower return to company (not deductible, less to pay) deductible) Risk Higher risk (must pay Lower risk (pay whenever, backobligationbankrupt risk discretionaryless risk) Control More controlless ownership given Less controlmore captains at the up ‘helm’ Legal recourse Highlegal obligation to pay back Lowno legal obligation to pay creditors dividends NEGOTIATING (9 MARKS: 5 MARKS MC, 4 MARKS SA) LECTURE MATERIAL: WEEK 9 Negotiation Strategy Matrix - Negotiation – ongoing process through which 2 or more parties with inconsistent positions work to reach agreement o If you don’t have different positions then there is no negotiation involved B U 1 2 1 F i n a l E x a m N o t e s E d w i n a C h e u n g | 2 Proactive Collaboration Competition Win/Lose Win/Win Low cooperation High cooperation Avoidance Accommodation Lose/Lose Lose/Win Reactive Proactive - You are assertive/anticipate what the person will do and act on it Reactive - You wait to see what the other person is going to do then you react Low cooperation - More difficult, not so willing to work together High cooperation - Extremely willing to work together No one of these strategies are universally applicable or appropriate Avoidance (lose/lose)  nobody wins - Not really cooperating - Might have times where this strategy makes sense - Not an effective negotiating style - Use this when it’s a minimal issue or if there’s a superior and ready option available elsewhere o In a way that invests the relationship but objections are a sign of interest (use another method then) Accommodation (you lose/they win) - A lot of people think when they’re accommodate, they think they’re building relationships but it’s not true - You’re giving up your position - Doesn’t build a relationship, they just took advantage of you, not good relationship - Way to test your relationship - Use it when you’re in a significantly weaker bargaining position (position can be improved with knowledge) and make it clear you are accommodating the other party - Use it when you have made a mistake, you are in the wrong - Ensure the other side doesn’t expect this from you again Competition (you win/they lose) - Size of pie is fixed, if I get a bigger slice, they’re getting a smaller slice - Person doesn’t care about the relationship or doesn’t think there is one - Effective for the person - Look for true potential of negotiation o Realize both sets of needs can be met - Be competitive if they’re competitive and if there’s no potential for negotiation - Be careful as you may endanger future prospects that you might have with them (even if you’re unaware) Collaboration (win/win)  win-win situation - Significant opportunity - Everyone comes out of this. Increase size of pie, share info, work together - Decision makers willing and capable - That is why if you tend to not negotiate you’ll conflict. You’ll see that it’s possible in a collaborative way - Applicable only when other strategies do not work or facing end of negotiation - When a situation presents an opportunity and the decision makers are willing on all sides - Need internal collaboration and trust to get external collaboration  80/20 rule o Collaborate 20% of the time will give you 80% success B U 1 2 1 F i n a l E x a m N o t e s E d w i n a C h e u n g | 3 o Difficult and uncommon o People have natural tendency to protect themselves - Everyone can benefit, but need prep, need identification and trust - To have external collaboration, need internal collaboration first 2 Categories of Collaborators - Sages: real collaborators (rare) o People who collaborate, but they know when it is an appropriate strategy to use o Recognize the opportunity to cooperate - Dreamers: wanna-be’s (common) o They’re idealistic, think they collaborate all the time, they assume that the other party will always be collaborative as well o Either think they are collaborators or want to be collaborators o Actually are accommodators since they are trying to be a collaborator and not sticking to what they truly are - What really matters is how the other side sees you because this affects how they negotiate with you - Check strength of accommodation tendency vs. competition tendency o Tendency to compete = sage o Tendency to accommodate = dreamer - Biggest concern is when the number for any strategy is way too high o Deploy this strategy regardless of the situation and the strategy used by the other party Interaction Styles – Related to Negotiating Tendencies - Key: be observant enough to recognize it o Take in their behavioural style and company culture o Company culture and objectives will impact the strategy you implement - 4 basic interaction styles (similar to DISC as it flows from personality) o Based on pace of information o Focus on tasks or relationships - Be observant and assess the other side’s tendency, as most people are predictable  find their comfort zone - Look at their behavioural style and company culture - Negotiation must have catered to personalities/interests o Keeps them engaged and builds rapport - Pace of information exchange o Look at how quickly the person is exchanging info, pace at what they’re talking - Most people are only 1 of the 4  shows tendency to react in a situation where there is a disagreement Fast pace Drivers Expressives Task focus People focus Analyticals Amiables Slow pace - Analyticals (C) – cautious, focused, unemotional task, want to analyze the data, slow, detail oriented o Avoids: making a mistake. They’re scared of making a mistake so that’s what drives them o Task focus, slow paced, want to make a right decision o Appear to use avoidance, but will eventually reach a decision at which point it will be hard to change their position B U 1 2 1 F i n a l E x a m N o t e s E d w i n a C h e u n g | 4 o Quiet, give them the right info - Drivers (D) – fast paced, task focus, direct o Most people are scared of drivers in negotiation o Will tell you exactly what they want, no guessing (good thing in negotiation, easier), they are most likely to collaborate with anyone o Appear intimating but you’ll know what they want and meet them there and then they’ll collaborate with you o Their issue is: failure but comfortable with making a mistake o If you compete against them though, they will likely collaborate to avoid losses o Focus on the bigger picture rather than getting lost in details (don’t focus on details) o Unemotional, transparent, intimidate during negotiation - Expressives (I) – hard to get them to focus on task if they’re pure expressive o Avoids: boredom so dislike detail o Passionate, wanting to engage you, moving quickly, details bore them o want to engage with you, want to work with you but if you’re not at their pace, they will want to disengage you o Expressive is a want-to be collaborator, they want to be doesn’t mean they have the skill o Fast paced, people focus o Will make decisions quickly and appear to collaborate, but are most likely dreamers o Quick talkers. They’re dreamers, no follow through o Emotional, like to form relationships - Amiables (S) – concerned that everyone is happy, move slowly painfully make sure that everyone is happy. Expressives and drivers don’t like that o Their style is accommodator o They’re the hardest person in negotiation because you don’t know what they want and they’re nice to you and your competitors o Avoids: conflict o People focus, slow paced o Make everyone happy and want to avoid conflict  They don’t proceed until they know someone is happy o They will not tell you what they want and are the hardest to negotiate with o Don’t share feelings in fear of conflict o If conflict arises, they will likely accommodate o Then they will guilt trip and complain after the fact to get what they lost 5 Negotiating Strategies – When to Use - None of the strategies are universally applicable or appropriate - Avoidance o Bad thing but sometimes makes sense o Use when it’s a minimal issue or if there’s a ready option elsewhere  It’s not worth the effort  Recognize it may grow in importance  You need to recognize if it’s going to be an issue or not  If you avoid, people might think you don’t care which affects the next time you two collaborate  Do it in a way that demonstrates investment in relationship o Strategy that some people use, they don’t want to negotiate with you cause they see a better option - Accommodation o Generally not as effective o When going into negotiation, if you’re more prepared than the other side, doesn’t matter what you’re negotiating, you’re just more knowledgeable o How you accommodate is as important as when o Use it when you’re in a significantly weaker bargaining position  Position can be improved with knowledge  Make it clear you’re accommodating the other party o Use it when you have made a mistake or you are in the wrong: Don’t make any excuses or blame it on someone else  If you tell other person that it’s your fault and that you’re prepared to take the responsibility, they’ll be surprised and so they’ll back off and not penalize you B U 1 2 1 F i n a l E x a m N o t e s E d w i n a C h e u n g | 5 o Very powerful in a negotiation - Competition o Use when the opponent is not inclined or capable of collaborating or if it’s just not worth the effort  No relationship to develop  Need senior players in loop to get at true needs o People compete because they don’t have the opportunity to collaborate o Don’t have the skill, personality, authority o If you can’t collaborate, either lose or compete with one another o People will compete because they know there will no longer be future business o Not worth the effort  There is still a slight potential for a collaboration  Be careful to look for true potential of negotiation - Collaboration o When situation presents a significant opportunity with capable and willing decision-makers on all sides  Win-win-win  Fits with 80/20 rules  20% of the population has the opportunity to collaborate  And will result in 80% of your success  Because the outcome is that much better  It will only work 20% of the time but it will equate to 80% of your success overall o It requires preparation, can’t go into a collaboration without preparation o Need identification and candor – requires trust o Want to know what you want out of it o Have to understand their needs too o If you truly want to collaborate in a business context, want to collaborate with people outside your group, you have to collaborate with people INSIDE your group first  Have to get used to it  Starts with the inside of the company, how they deal with each other o Internal collaboration is prerequisite for external collaboration o Applicable only when other strategies don’t work or facing the end of the negotiation - Compromise o When all other tactics have been exhausted, you give up small things to reach an agreement. Agreements usually always follow Principles vs. Positional Bargaining (distributive vs. integrative) - Positional -> typical type of negotiations o People state their positions – state what they want  They’ll argue it and it’ll be a give or take (argue for it until one wins and one loses)  Time consuming o Distributive: mindset that there is a fixed pie and you will split it. It’s a limited resource. Pick one side  Competing, compromising, or accommodating  Competing – bigger slice of the pie  Accommodating – you take the bigger slice, I’ll take the smaller  Compromising – deciding that taking a certain amount as there’s only limited o To truly collaborate, you have to have the mindset that the pie can expand - Principled (integrative): use collaborative strategy o Changing our mindset to integrative  We can expand the size of the pie if we collaborate, can both win o Produce a wise agreement: expand the size of the pie o Efficiently: focus on interests, not positions  Reached more efficiently, not wasting time, energy, etc  Working together to reach a solution o Amicably: maintain the relationship  Try to get along and not damage the relationship Advantages of Principles Negotiations - Outcome is better, more efficient - Not arguing/wasting resources - Less stress on relationship B U 1 2 1 F i n a l E x a m N o t e s E d w i n a C h e u n g | 6 4 Basic Points - Separate the people from the problem o People start attacking each other, change it so that work together to attack the problem and not each other o Fight the problem, not the person - Focus on interests not positions (fundamental) o Get underneath it to get the interests o What is the need you’re trying to satisfy here o Got to recognize what you want and then the size of the pie can be expanded as you’re looking at other options/ways o Not a matter of who wins, there’s an option where both win - Generate a variety of options before deciding what to do o Lay out options o A good agreement would look like that o Decision criteria (similar) - Insist that the result be based on objective criteria OPERATIONS AND SUSTAINABILITY (16 MARKS) LECTURE (11 MARKS SA) Service vs. Manufacturing Implications for Decisions - Both transform “raw material” into finished good - Identical in the operation standpoint of them transformed the good into a final good Service Manufacturing Raw material is the person with unsatisfied need, or the Raw materials are the products that will be possession that requires care used to make the final product Service is performed; focus on how it is done Products are produced Focus on process and outcome; judged on quality of work Focus on outcome. Judged on quality of work & service (how fast the customer got it) Intangible; experience is key because you’re providing an Tangible; you can see it, feel it/ experience, and is customized. Can’t be stored Manufacturing are not always customized Customer is part of the process; extent of contact affects Manufacturing can run 24/7. Customers are operations as sometimes customer must be available  not part of the process location important Service cannot be stored, so inventory = not an issue Products are stored, inventory can be an issue Running a McDonalds Making a burger Category Service Manufacturing Input Person’s unsatisfied need or possession in Raw materials or natural resources need of care How it’s done Performed Produced Judged on Quality of the work as well as the service Quality of the outcome Customers role Apart of the process Removed from the process Greater contact = bigger impact Characteristic Intangible, value the experience Tangible (can be stored) Customized to each customer’s needs Can be customized or universal product Capacity - Integration of marketing and operations - Marketing and operations both have capacity issues o Tradeoff between capacity and demand o Have balance of the two - Demand vs. capacity trade-off: demand and capacity must work together - For manufacturing o Set capacity slightly ahead of demand to avoid turning away customers o Set capacity high with plans to expand o Very expensive to add on later/sit idle o If you don’t have enough, lose customers and also go outsourcing o Seasonality – shift demand and capacity requirements by pricing B U 1 2 1 F i n a l E x a m N o t e s E d w i n a C h e u n g | 7  One way to deal with this and deal with capacity is to shift the demand to off-season  Price it lower (e.g. Christmas trees)  Through pricing, you can shift your demand to even out with capacity requirements. Put discounts and value deals to even out demand and get people to purchase your summer products in the winter as gifts - For service o Depends on contact o Low contact – don’t need to be there for you to provide the service  Set capacity to average demandcustomer isn’t waiting for you to finish providing your service o High contact – person is actually there  Set capacity at peak demandmost customers are relying on you, capacity must match demand Mass Production vs. Mass Customization - Some manufacturing are specifically customized - Mass production technology o Manufacturing many identical goods at once o Old style to approach things o Requiring a stable market to function properly  You’re producing the same thing over and over again so there has to be a stability with the market o Focus is on how efficient you can produce it  Efficiency vs. effectiveness  As opposed to the effectiveness of what you’re actually doing  Not about the product but how efficient you’re producing it  This is selling what we produce  Relies on standardization, mechanization and specialization  Focused on keeping low costs and how you produce, not effectiveness and what you’re producing o Repetition  Simply repeat same production process over and over  Customers must require the same thing every time o Economic reality: no longer most effective option since we live where this is constant change and customers want products tailored to them - Mass customization (New economic reality – makes more sense today) o This is producing what we can sell (effectiveness) o Use mass production techniques only to certain point o Constant change – Things change everyday  Mass customize makes sense because we don’t have stability; we can’t focus only on efficiency  Flexible, allows production to meet market changes o Customer-driven reality  Doesn’t make sense to do things unless we know exactly what customers want  Customer demands exactly what they want  it’s not always the same product  Focuses on effectiveness and what is produced  Customized to the tastes of customer o Customization and innovation  Mass customization works toward efficiency & effectiveness by producing mass product in custom way  Product or service then tailored to customers o Technology that can feed customizations info manufacturing works together with mass production o Marketing works closely to deliver changes in tastes o Programmable robots make process efficient - Stable market and constant change doesn’t mash together - Efficiency and effectiveness doesn’t mash with customer-driven - Repetition and customization doesn’t mash - We make the right tweaks are what the customer wants - Connection between operations and marketing has to be a lot tighter - Information about customers has to be put into computer form and put into machines so they can make the adjustments and they know what’s needed Triple Bottom Line - Sustainability – changing the way what we’re doing so we do not prevent future generations from doing what they want to do B U 1 2 1 F i n a l E x a m N o t e s E d w i n a C h e u n g | 8 o The direction businesses should go in to be successful; we can’t do what we’re doing forever. We must operate in a way that we can sustain ourselves without taking away from future generations - Measured by the Triple Bottom Line o Got to recognize that your bottom line is affected by a number of factors o Not just profit that affects your bottom line, but also the environment and society o There are 3 P’s to focus on, Profit/Environment/Society – People/Planet/Profit - Sustainability Sweet spot – if you can find it where those things intersect o Place where corporate and societal interests intersect – a new way to measure the bottom line o Where impacts on profits, environment and society are in balance o No tradeoff between profit and impact on the planet and people - If you find where you have met all those things, your profit will go up - Way to weave sustainability into operations o Product design o Product stewardship o Through service o In supply chain Cradle to Cradle vs. Cradle to Grave Cradle-to-grave design - Traditional take-make-waste-model o Linear o Taking something from the Earth, using it to make the product and then throwing out the rest that we don’t need o Was unsustainable and afterwards tried to focus on becoming more eco-efficient (‘less bad’) by using 3Rs  Tweak it using the 3 R’s (reuse, recycle, reduce) Cradle-to-cradle design - Eco-effective design based on nature’s design principles o “Waste equals food”  Nature sees waste as food  Goes back to Earth in some way  Products may be designed so that after their useful life, they provide nourishment for something new, either as biological nutrients that safety re-enter the environment as technical nutrients that circulate within closed loop industrial cycles, without just being down-cycled into low-grade uses  Eliminate the concept of waste; create products that essentially will never become waste o Products developed for closed-loop systems  This is not linear, it’s closed-loop o Every output is safe and beneficial  Have to think about output as safe, how could it be a nutrient o Biological or technical nutrients  Could it be designed so that it literally goes back to the earth and nourishes the soil for the earth  Youtube: Sun Chips Compostable Chip Bag Earth Day 2010 o Technical  Or could it be designed to recycle and create something new of equal value o Eliminate the concept of waste Biomimicry - Mimicking biology - Sustainable innovation inspired by nature – “biologically inspired engineering” o Intimidating what’s there out there in nature - Based not on what we can extract from organisms and ecosystems (harvesting or domestication), but what we can learn from them o Focus on what can we learn/inspired by how nature handle things - It’s a sustainable innovation inspired by nature. It’s not extracting from environment but learning from it - Example of a product that was inspired by nature: Velcro o Was unintentional but same concept - Not a product, an approach, got their inspiration from nature, positive consequences Product Stewardship - Aftermath of cradle-to-cradle design - Focus on impact during and after use (disposal) B U 1 2 1 F i n a l E x a m N o t e s E d w i n a C h e u n g | 9 - Many companies take back products after use - The responsible and ethnical management of the health, safety, and environmental aspects of a product throughout its total life cycle  as a product goes through its life cycle, it has a damaging impact - The concept of extended producer responsibility – accounting for the impact of a product during use and after disposal - Recognize the impact of your product through its entire life cycle - Don’t think that just cause you sold your product, it’s no longer your problem, it’s always your problem - Your responsibility ends past your sale - Recognize that your responsibility continues during use and after disposal - Stewardship Ontario – a company that’s doing this Sustainability through Servicing - Increased efficiency and creation of eco-friendly products and processes is necessary but not sufficient - Gains may eventually be counteracted by increase in consumption o Sustainability growth may be overcome o Gains will be outweighed by that there are too much out there o Can we make income that’s actually sustainable - There is eventually a limit to how far we can sustain activities before it limits products - Change business model from selling products to providing services o Turn demand for reduced material use into a strategic opportunity o Services more difficult to imitate (gives more competitive advantage) - At some point, the people you’re selling to are going to somehow manage the consumption o The management and cost of it o There is a demand out there somewhere o The customer doesn’t want to have all of this product o services are more harder to copy because it’s unique  gives you a powerful competitive advantage that is sustainable - Xerox – photocopiers o 1994 – became the ‘document company’ – help companies improve efficiencies in document- intensive business processes o Adjusted the business model to become the document company o Providing a service that creates a bond with the customer o Help you save some money Sustainability of the Supply Chain - “a network of facilities that procure raw materials, transform them into intermediate goods and then final products, and deliver the products to customers through a distribution system, and deliver them back with improvement of the social and environmental impacts explicitly considered” - “management of raw materials and services from suppliers to manufacturer/service provider to customer and back with improvement of the social and environmental impacts explicitly considered” - Outsourcing business operations doesn’t mean outsourcing responsibilities or risks in today’s global economy – sustainable supply chain management is key to the integrity of the brand - If you outsource must consider how they operate and if it harms the environment o If you are sustainable and they are not your whole operation is not sustainable o Recognizing that when you outsource, you can’t outsource responsibility o Recognizing that every supply that comes in has to be sustainable for the WHOLE thing to be sustainable o Key to brand integrity: Affects brand - Supply chain – entire sequence of securing inputs, producing and delivering goods to customers. Done through network of facilities HUMAN RESOURCES AND LABOUR RELATIONS (24 MARKS) LECTURE (21 MARKS SA) Recruitment Objectives - Comes out of planning process - If you haven’t planned adequately, you have to rush to hire - If you don’t understand the impact of what you’re doing and rush, you try to ‘sell’ the job to someone you think is appropriate, so you create unrealistic expectations for the person and build it up too much o You build it up, you don’t meet their expectations so they will leave the company o You’ll have to continually recruit Realistic Approach B U 1 2 1 F i n a l E x a m N o t e s E d w i n a C h e u n g | 10 - Recruitment: finding the right people and hanging onto them because you don’t want to keep recruiting more o A high recruitment turnover means that the recruiting process was not carried out properly - Realistic approach: plan well and do it well, be honest  leads to better people for the job who are more likely to stay with you. You should mention cons to avoid disappointment, so workers know what to expect o Must be open about what the job entails, let them accept the bad things - Approach with the reality of the situation - Your employee is more likely to stay Employer Branding – it’s like marketing, market towards them to attract the best employee for your business, about generating qualified pool of potential employees - define target audience you want to attract o know what type of person you want to attract - develop the employee value proposition o what can you offer them, how do you compete with others for that labour (your competitive advantage) o Understand the value you are offering, has to be better than competition - communicate the brand o create the right perception of your company - Understand the value you are offering o Has to be better than competition Video: Canadian Forces – Commercial 2010 - target audience: people they can train for specific tasks - offering: the ability to learn those skills - shows no women, yet it’s still more gender neutral Selecting Recruitment Methods - Tools Yield Ratios - percent of applicants that were qualified enough to proceed to the next stage o measuring how well that approach might get you qualified people o want a higher yield Time Lapse Data – from start of recruitment to start of work - quantitative data taken from the time of recruitment to the start of work - you want it to meet your requirements, generally a shorter time - e.g. university recruiting takes a very long time - if you need people quickly, you go to an agency Selection – determining which person in the applicant pool posses the qualifications needed to be successful in the job Validation Process - criterion validity: want to see that in the method, that if someone does well, that they actually will perform well (that there’s a connection) o those that do well on selection method (predictor) also perform well on the job (criterion)  connection between predictor and criterion o People who say they will do well usually end up doing well  validity = predicting success - administer the selection procedure to a group of people o see responses - correlate (compare) the results/predictor scores with performance/criterion scores - look for valid predictors and keep the valid predictors o strong correlations o things where certain answers give a level of success versus another answer gives another level of success o don’t want answers where the successful and unsuccessful gave the same thing, wouldn’t tell you anything/be helpful o there are 2 ways to do the process, and the difference lies depends on who is administered to and implications (concurrent, predictive) Predictive & Concurrent (two types of validation) - difference is in who administered to and different implications because of that: o Predictive (go through using applicants)  Implies: that you have to wait/store the results to compare with their performance later on  Giving it to potential applications  Slower process, but more accurate  But the applicants are the same people that you’re going to use them on, very representative o Concurrent (go through using current employees, already know their performance) B U 1 2 1 F i n a l E x a m N o t e s E d w i n a C h e u n g | 11  Implies: Do not think the same way applicants would, ‘tainted’ by their knowledge of the company culture, expectations, experience  Faster, but less accurate  Use current employees, give them questions to determine predictors  they’ve already worked on the job, so they may be biased - If a company is testing a new selection instrument, they use it on both types - Use a mix of both concurrent in the present, while waiting for predictive results Application to Selection Methods Weighted Applications - Application Forms (commonly done) – you strategically want the best people o What can you ask?  Certain questions should not be asked: only valid to the job  There are regulations surrounding this to avoid discrimination (doesn’t make good business sense)  Technically you should only ask for business, religion, age, social based questions, criminal checks, education and experience  You can’t ask where you went to school: can reveal other things about you  Eg. your public school’s neighbourhood has cultural base/socio-cultural position  may lead to discrimination/bias  Other details are not relevant, not bona fide qualifications  This is good b/c then you only have to filter for requisite qualifications o What is it used for?  Finding qualifications of applicants  Used to screen for things that make a difference, job specifications, if necessary qualities are present o “weighted application blank”  Looking at how well a particular question will predict good performance  Selecting employee characteristic to be measured, identifying which questions predict the desired behaviour, assigning weighted values to each relevant question, and scoring the applicant’s completed application form  You give more weight to some questions; Weighting helps determine what is critical qualification to job success  To one question, 50 people answered yes and 40 of those are successful at their job, the weight on that question would be 80  People who answer yes to this question are seen as positives Interview Validity - most common but least valid o can be made valid, but typically the approach taken is not, so should not hold a lot of weight - because of interviewers and questions asked o more affected by negative information than positive o look at resumes and form an impression, and then you don’t really look at them as a whole o interviewers are human, so they have biases and weaknesses o bad at making comparisons: 3 really good people, next person average = rated badly / 3 really bad people, next person average = rated really highly - Problems: o Don’t predict performance well o Natural biases (they’re human) o Comparison to other interviews o Personality comes through o Resume gives pre conceived ideas - there is a degree of variance and validity of questions o inaccuracy when comparing o asking individualized questions as part of the ‘conversation’= cannot compare to others o not related to the job/their success in it = not valid - Solution: o Train interviewers:  Train, use more than one, use job analysis, and give feedback  Train: Need to be aware of biases so you can avoid them/ignore them B U 1 2 1 F i n a l E x a m N o t e s E d w i n a C h e u n g | 12 o To be more aware of biases, use more people to get less bias, and give more feedback  If you use more than one: you balance it out (can also have multiple interviews so that more than one interviewer evaluates the applicant)  Use job analysis to create patterned questions o Ask them in the same way in the same order  Feedback: l
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