2.1.3 Selection & Employment Contracts
The Boardroom Brief: Hiring Strategy & Legal Architecture
AO2: Application
Match selection methods to job requirements
AO3: Analysis
Build chains: Cost → Accuracy → Risk → Financial Impact
AO4: Evaluation
Weigh flexibility vs motivation in contract design
The Theory Deck: Selection Methods & Contract Types
📊 Selection Methods Matrix
1. Interviews
- Pros: Cheap, Quick, Assess communication
- Cons: Halo Effect bias, Cannot test technical skills
- TRAP: Confidence ≠ Competence
2. Assessment Centres
- Pros: Multi-method validation, Observe behavior
- Cons: Expensive (£2,000+ per candidate), Time-intensive
- BEST FOR: Graduate schemes, Senior roles
3. Psychometric Testing
- Aptitude: Numerical/Verbal reasoning
- Personality: Cultural fit (Myers-Briggs, Big Five)
- WARNING: Cannot be sole method (discrimination risk)
📜 Employment Contract Architecture
Permanent Contracts
- Full employment rights (redundancy pay, notice periods)
- Benefit: High motivation, loyalty, skill development
- Risk: Fixed cost even if demand falls
Temporary Fixed-Term
- Contract ends on specific date (e.g., 6-month project)
- Benefit: Flexibility without redundancy costs
- Risk: May lose talent if competitor offers permanent role
Zero-Hours Contracts
- No guaranteed hours. Employer calls when needed.
- Benefit: Maximum flexibility, variable cost
- CRITICAL: Low motivation, high turnover, potential PR damage
The Strategic Framework: "Fit-for-Purpose" Hiring
1. Job Risk Analysis
High-risk roles (pilots, surgeons) require objective testing. Low-risk roles (retail) can use interviews.
2. Cost-Benefit Calculation
Cost of wrong hire > Cost of thorough selection? Invest in assessment centres.
3. Demand Pattern Matching
Permanent demand → Permanent contracts. Seasonal/project → Temporary/Zero-hours.
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