Form I/O psychology perspective, the social and legal context is very important for personnel decisions. Any personnel decisions made by an organization must be compliant with the federal and state labor laws; a personnel decision should also reflect the organization’s social responsibilities for the wellbeing of employees and the public. If an employer makes personnel decisions solely based on the self-interest, it may result in people conflicts and legal challenges, which would harm the organization's reputation and profitability. To ensure a personnel decision made to be fair, legitimate, and nondiscriminatory, the organization must thoroughly consider social and legal context in decision making process.
According to Hirsh and Lyons (2010), personnel decisions such as hiring, firing, promotion, forming work teams, and job assignments can affect employees’ perceptions in work environment. Social status, job characteristics, and workplace context may impose the likelihood that workers perceive race discrimination at work. For example, certain workplace conditions can signal fairness and decrease perceptions of racial bias, such as formalized screening practices and having nonwhite supervisors, whereas working among predominantly nonwhite co-workers increases the likelihood of perceiving discrimination. Therefore “personal attributions of discrimination vary across social groups and their environments, and demonstrate the importance of workplace context for understanding how individuals apply legal concepts, such as discrimination, to their experiences” ( Hirsh & Lyons, 2010, p. 269). Hence in order to avoid negative perception or misunderstanding toward a personnel policy or decision, the management and personnel staff need to analyze social and legal context relevant to the decision.
Hirsh, E., & Lyons, C. J. (2010). Perceiving Discrimination on the Job: Legal Consciousness, Workplace Context, and the Construction of Race Discrimination. Law & Society Review, 44(2), 269-298.