RUNNING HEAD: OUTBACK STEAKHOUSE

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Outback Steakhouse

Strategic Human Resource Management HRM 530-010016

Professor Byrd

May 15, 2011

Barbara Gilley

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OUTBACK STEAKHOUSE I. For the following reasons the employee selection methods at Outback Steakhouse (OS) help the organization achieve a competitive advantage: a. OS has implemented a precise selection process assisting in hiring employees to effectively impact OS. b. OS focuses on achieving competitive advantage which allows OS to select the most qualified applicants who conform to the culture, visions, and beliefs. c. This selection process support meeting expectations and employee accountability via validity tests. The following describes the importance of employee fit to Outback Steakhouse: a. OS employee fit is important to carry out OSs vision and mission. b. OS employee fit is important in preventing employee turnover. The following is justification of the selection method order that Outback Steakhouse employs: a. The application is first to help determine if applicant is a cultural match. b. Testing is second to validate how potential applicants measure up to existing Outbackers c. Interviewing is third to allow management to assess first hand if applicant is a team player, hospitable, and a quick thinker. The following explains whether or not the selection methods described above are valid: a. Reliability method yields consistent results. b. Concurrent validation strategy is a form of criterion-related validity estimates which assessments are obtained from current employees. c. Utility which is a selection method(s) that reflects cost effectiveness. d. Legality & fairness in the perception of bias and discrimination in the selection methods. e. Acceptability in which reflects an applicants beliefs

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Discuss how the employee selection methods at Outback Steakhouse help the organization achieve a competitive advantage.

There is no doubt that Outback (OS) has made effective use of the intangible factors found in the categories of human resources and organizational knowledge to develop a competitive advantage that will be difficult for competitors to duplicate. Outback's challenge for the future is to maintain its advantage by building on its already strong combination of intangible factors . . . people. It is important for OS to select the right candidate for the job based on needs, Outback Steakhouse (OS) has implemented a precise selection process for hourly and management employees that will assist in recruiting, hiring, and retaining employees to effectively impact Outback Steakhouse. Outbacks selection process focuses on achieving a competitive advantage because it allows Outback to recruit the applicant, assess an applicants qualifications, then select the most qualified applicants based upon Outbacks objective; therefore, choosing applicants who are willing to conform to the culture, vision, values and beliefs of Outback Steakhouse allow OS to remain with a competitive advantage. Outback Steakhouse employees selection methods focus on hiring individuals that understand and have the ability to carry out the expectation of valuing teamwork, accountability, kindness, and individual responsibility. In a world where business models are quickly understood by competitors, a flexible structure is a key to success in many companies (Bulkeley 1994; Vesey 1991), as it is with Outback. Defined as the shared values of its members,

organizational culture often reflects the values of management, combined with the human resource management practices that create the working conditions and the experiences of OUTBACK STEAKHOUSE Pg 4

employees, giving employees the "right to express their ideas and suggestions, has been a known feature of Outback Steakhouse. The validation test in which provides guidance in validating potential new hires against existing outbackers who have been successful in the company is a strategic way to find out if an individual is a good fit and that along with the series of test that are given makes Outback a step above the average restaurant when it comes to the selection process of hourly and management workers. By capitalizing on the strength of their employees, Outback not only keeps their turnover low; Outback Steakhouse has gained a competitive advantage within the restaurant industry. Is Outback Steakhouse aware of the costs associated with a bad hiring decision? Absolutely, Outback knows it will cost more moneymore time.more trainingwhich is not good for business; therefore, OS have found a correlation between established employees and potential applicants. This places OS on a higher playing field verses competitors. Discuss the importance of fit to Outback Steakhouse. The individual match to Outbacks culture, principles and values is of great importance to OS, and that is why Outback has a rigorous selection process which guides OS to carefully select the right individual for both hourly employees and management employees; therefore, in the reading it states a key factor to making OS a great place to work which is hiring the right people. The organizational based fit is very important to the success of carrying out the vision and mission of Outback Steakhouse. This organizational based fit keeps turnover low while retaining

good leaders. It is to be noted that turnover rates in the U.S. restaurant industry often exceed 90% per year (National Restaurant Association and Deloitte and Touche, 2001; Woods and OUTBACK STEAKHOUSE Macaulay, 1989). Such high levels of turnover impose both direct and indirect costs on businesses. Direct costs include the time and money needed to find, hire and train replacement workers. Indirect costs include reductions in productivity and service caused by understaffing during the time it takes to find replacement workers and by the inexperience of new workers once they are found and hired (Woods and Macaulay, 1989). OS has a lower turnover rate verses competitors which lower OSs direct and indirect costs. Evaluate Outbacks selection process including the order of selection methods such that applicants first complete an application, then complete tests, and then participate in interviews. Pg 5

Employee selection is the process of choosing people to bring into an organization. Effective selection provides many benefits. Selecting the right employees can improve the effectiveness of other human resource practices and prevent numerous problems. An example includes hiring highly motivated employees who fit with the organizational culture can reduce disciplinary problems and diminish costs related to replacing employees who quit. Employee selection ranks high with Outback Steakhouse. What is the selection process for OS? Does OS focus on job-based fit or an organization-based fit? OS focuses on organization-based fit since personality, values, and goals are important to OS vision, as well as, Outbacks mission. Although OS states that the selection process is proprietary, OS does provide some insight into the selection process.

The OS employee selection process begins like this. OS stresses to all applicants that taking care of others is first and foremost, OS also states that Outbackers will be held to a high standard of accountability which is posted in the job preview. After review of the job preview, applicants OUTBACK STEAKHOUSE Pg 6

are shown the Dimension of Performance which provides detailed examples of behaviors that are tied to the vision of OS. Many applicants withdraw after discovering that accountability and expectations play an important role at OS. Applicants that do move forward are asked to fill out an application to determine if the potential applicant can perform expected duties, fit within the Outback culture, and possibly be a long-term employee. Many entry-level jobs require potential employees to complete an application form. Application forms ask for information such as address and phone number, education, work experience, and special training. This is a common method for gathering more information about the applicant. The next phase is the testing phase to assess cognitive ability, personality, and judgment; this assessment has been validated against Outbackers that have been with OS for a period of time and who have been successful. Tests measure knowledge, skill and ability, as well as other characteristics such as personality. Cognitive ability testing measures learning, understanding, and ability to solve problems. Cognitive ability tests are sometimes referred to as intelligence or mental ability tests. Some measure ability in a number of specific areas, such as verbal reasoning and quantitative problem solving, whereas, personality testing measures patterns of thought, emotion, and behavior. Researchers have identified five broad dimensions of personality: agreeableness, conscientiousness, emotional stability, extraversion, and openness to experience.

Once applicants pass testing, an interviewed is scheduled where management can assess first hand if the applicant is service mined, a team player, hospitable, and a quick adapter who can quickly think on their feet. The interview is the most frequently used selection method. OUTBACK STEAKHOUSE Pg 7

Interviewing occurs when applicants respond to questions posed by a manager or some other organizational representative. Most interviews incorporate conversation between the interviewer and the applicant. The typical interview is an unstructured interview in which a single rater asks a series of questions and then provides an overall recommendation on whether the person interviewed should be hired; however, OS utilizes structured interviews using a list of predetermined questions based on knowledge and skills that job analysis has identified as being critical for success. This assures that the questions are appropriate and that all applicants are asked the same questions. The interview is useful not only for evaluating applicants, but also for providing information and selling the organization as a desirable place to work. Good selection practices must fit to the overall strategy for Outback Steakhouse. Human resource strategies vary on two dimensions: an internal or an external labor orientation and whether they compete through cost or differentiation. OS strategies provide important guidance about the type of employee selection practices that will be most effective and utilized at Outback Steakhouse. Evaluate whether or not these selection methods are valid. Good selection practices must fit to the overall strategy for Outback Steakhouse. Human resource strategies vary on two dimensions: an internal or an external labor orientation and whether they compete through cost or differentiation. OS strategies provide important guidance

about the type of employee selection practices that will be most effective and utilized at Outback Steakhouse.

OUTBACK STEAKHOUSE There are five principles associated with employee selection methods. Reliability is concerned with consistency of measurement. One way to evaluate reliability is to test or

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interview a person on two different occasions and then determine whether the persons scores are similar across the two times. OS reliability in regards to selection methods are valid; OS tests and interviews potential applicants. This is called the test-retest method of estimating reliability. Another way to evaluate reliability is to give two different forms of a test. Since both tests were designed to measure the same thing, it could be expected that peoples scores on the two tests would be similar. This is the alternate-forms method of estimating reliability. How does a company know if a test is valid? Evidence of validity can come in many forms, and assessments of validity should take into account all evidence supporting a relationship between the assessment technique and job performance. OS utilizes a form of criterion-related validity estimation in which selection assessments are obtained from people who are already employees. OS has found a correlation with established employees and potential applicants; therefore, this selection method is valid. The third principle associated with employee selection methods is utility, which concerns the methods cost effectiveness. Basically asking if the test is too expensive for the number of applicants to be tested? Several factors are associated with utility which are validity, number, tenure, performance variation, selectivity, fixed cost, variable, and number. Although there may

be issues and or concerns with this method, the goal is to have management to look for selection processes with high validity and relatively low cost. A smaller, privately owned business would

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not benefit, however larger chain restaurants like OS would most likely benefit based on their vision and mission. The fourth principle asks if the process is legal. This is where the Human Resource professional has to be aware that the assessment methods do not break any laws and is fair for all applicants and each application is treated equally and fairly. There are no concerns based on the information reviewed pertaining to the job review, applicant process, and interviewing of Outback Steakhouse. Finally, when the applicant views the selection process as fair and equitable, the applicant has a positive image of the organization and views the methods as acceptable.

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References

Bulkeley, W. M. 1994. The latest thing at many companies is speed, speed, speed. Wall Street Journal, December 23. Vesey, J. T. 1991. The new competitors: They think in terms of "speed-to-market." Academy of Management Executive 5 (2): pp. 23-33. Woods, R.H. & Macaulay, J.F. (1989). Rx for turnover: Retention programs that work. Cornell Hotel and Restaurant Administration Quarterly, 30 (1), 79-90.