4220 Smith Exam 1
Trait systems
Type of performance-appraisal method, requiring raters (e.g., supervisors or customers) to evaluate each employee's traits or characteristics (e.g., quality of work and leadership).
Management by objectives (MBO)
a goal-oriented performance-appraisal method, requires that supervisors and employees determine objectives for employees to meet during the rating period, and then employees appraise how well they have achieved their objectives
occupation
a group of jobs, found at more than one company, in which a common set of tasks are performed or are related in terms of similar objectives, methodologies, materials, products, worker actions, or worker characteristics
Civil Rights Act of 1964
a major piece of federal legislation designed to protect
Team-based incentives
a small group of employees shares a financial reward when a specific objective is met
critical incident technique (CIT)
a specific kind of behavioral system, requires job incumbents and their supervisors to identify performance incidents - on the job behaviors and behavioral outcomes - that distinguish successful performance from unsuccessful performance; the supervisor then observes the employees and records their performance on these critical job aspects.
forced distribution
a specific kind of comparison performance appraisal system in which raters assign employees to groups that represent the entire range of performance
stairstep model
a type of pay-for-knowledge program, resembles a flight of stairs. The steps represent jobs from a job family that differ in terms of complexity. Skills at higher levels build upon previous lower-level skills
Comparison systems
a type of performance-appraisal method, require that raters evaluate a given employee's performance against other employees' performance attainments. employees are ranked from the best performer to the poorest performer
paired comparisons
a variation of simple ranking job evaluation plans, orders all jobs from lowest to highest based on comparing the worth of each job in all possible job pairs. Paired comparison also refers to a specific kind of comparison method for appraising job performance. Supervisors compare each employee to every other employee, identifying the better performer in each pair.
Fair Labor Standards Act of 1938 (FLSA)
addresses major abuses that intensified during the Great Depression and the transition from agricultural to industrial enterprises. These include substandard pay, excessive work hours, and the employment of children in oppressive working conditions. addresses: Minimum wage Overtime pay Child labor provisions
Pregnancy Discrimination Act of 1978 (PDA)
amendment to Title VII of the Civil Rights Act of 1964. The PDA prohibits disparate impact discrimination against pregnant women for all employment practices
Behaviorally anchored rating scales (BARS)
are a specific kind of behavioral system based on the critical incident technique (CIT). These scales are developed in the same fashion with on exception for the CIT, a critical incident would be written as "the incumbent completed the task in a timely fashion" For the BARS format, this incident would be written as, "The incumbent is expected to complete the task in a timely fashion"
Behavioral systems
are a type of performance appraisal method that requires raters to judge the extent to which employees display successful job performance behaviors
Signing bonuses
are monetary awards given to promote recruitment and job offer acceptance. These bonuses are particularly effective when coupled with a competitive wage or salary offer
legally required benefits
are protection programs that attempt to promote worker safety and health, maintain family income streams, and assist families in crisis. The key legally required benefits are mandated by the following laws: the social security act of 1935, various state workers compensation laws, the FMLA of 1993, and the patient protection and affordable care act of 2010
Human capital
as defined by economists, refers to sets of collective skills, knowledge, and abilities that employees can apply to create value for their employers
Management incentive plans
award bonuses to managers when they meet or exceed objectives based on sales, profit, production, or other measures for their division, department, or unit.
Internally consistent compensation systems
clearly define the relative value of each job among all jobs within a company This ordered set of jobs represents the job structure or hierarchy Companies rely on a simple, yet fundamental, principle for building internally consistent compensation systems: Employees in jobs that require greater qualifications, more responsibilities, and more complex job duties should be paid more than employees whose jobs require lesser qualifications, fewer responsibilities, and less-complex job duties
internally consistent compensation systems
clearly define the relative value of each job among all jobs within a company This ordered set of jobs represents the job structure or hierarchy. Companies rely on a simple, yet fundamental, principle for building internally consistent compensation systems: Jobs that require greater qualifications, more complex duties should be paid more highly than jobs that require lesser qualification
Job-based pay
compensates employees for jobs they currently perform\ include seniority pay, merit pay, and incentive pay
Portal-to-Portal Act of 1947
defines the term hours worked that appears in the FLSA
Stock options
describe an employee's right to purchase company stock.
Gainsharing
describes group incentive systems that provide participating employees with an incentive payment based on improved company performance for increased productivity, increased customer satisfaction, lower costs, or better safety records
differentiation strategies
develop products or services that are unique from those of their competitors can take many forms, including design or brand image, technology, features, customer service, and price
annual salary
employees earn salaries for performing their jobs, regardless of the actual number of hours worked throughout the year
Spot bonuses
employees receive small monetary gifts for outstanding work or effort during a reasonably short time period
local governments
enact and enforce laws that are most pertinent to smaller geographic regions
state government
enact and enforce laws that pertain exclusively to their respective regions Most noteworthy are differences in state minimum wage laws, which we will discuss shortly
National Labor Relations Act of 1935 (NLRA)
establishes employees' rights to bargain collectively with employers on such issues as wages, work hours, and working conditions
Davis-Bacon Act of 1931
establishes employment standards for construction contractors holding federal government contracts valued at more than $2,000 such contractors must pay laborers and mechanics at least the prevailing wage in their local area
cost leadership or lowest-cost strategy
focuses on gaining competitive advantage by being the lowest-cost producer of a product or service within the marketplace, while selling the product or service at a price advantage relative to the industry average
federal constitution
forms the basis for employment laws
Bias errors
happen when the rater evaluates the employee based on a personal negative or positive opinion of the employee rather than on the employee's actual performance
rating errors
in performance appraisals reflect differences between human judgment processes versus objective, accurate assessments uncolored by bias, prejudice, or other subjective, extraneous influences.
Extrinsic compensation
includes both monetary and nonmonetary rewards Compensation professionals are responsible for extrinsic compensation
360-degree performance appraisals
incorporate several sources of pertinent information to give a more complete less biased assessment of job performance. examples of pertinent source include supervisors, coworkers, and clients
Rucker plan
is a particular type of gain sharing program that emphasizes employee involvement Gain sharing awards are based on the ratio between value added (less the cost of materials, supplies, and services rendered) and the total cost of employment
Improshare
is a specific kind of gain sharing program that rewards employees based on a labor hour ratio formula a standard is determined by analyzing historical accounting data to find the number of labor hours needed to complete a product. productivity is then measured as a ratio of standard labor hours and actual labor hours
Scanlon plan
is a specific type of gain sharing program that emphasizes employee involvement. Gain sharing awards are based on the ratio between labor costs and sales value of production
collective bargaining agreement
is a written document that describes the terms of employment approved by management and employees during negotiations. It codifies the terms and conditions of employment regarding rates of pay and pay adjustments, and hours of work or other working conditions of employees
Incentive pay or variable pay
is defined as compensation, other than base wages or salaries, that fluctuates according to employees' attainment of some standard rewards employees for partially or completely attaining a predetermined work objective
compensable factors
job attributes that compensation professionals use to determine the value of jobs
Walsh-Healey Public Contracts Act of 1936
mandates that contractors with federal contracts meet guidelines regarding wages and hours, child labor, convict labor, and hazardous working conditions contractors must observe the minimum wage and overtime provisions of the FLSA In addition, this act prohibits the employment of individuals younger than 16 as well as convicted criminals Furthermore, this act prohibits contractors from exposing workers to any conditions that violate the Occupational Safety and Health Act of 1970
specialist
may be an HR executive, manager, or non-manager who is typically concerned with only one of the areas of compensation practice
generalist
may be an executive, performs tasks in a variety of HR-related areas. They are involved in several, or all, of the compensation functions such as building job structures, market competitive pay systems, and merit pay structures
base pay
money, for performing their jobs
illegal discriminatory bias
occurs when a supervisor rates members of his or her race, gender, nationality, or religion more favorably than members of other classes.
free-rider effect
occurs when employees of lower ability, skill, and effort benefit equally. as employees of higher ability, skill, and effort in group incentive plans this can lead to resentment and turnover of stronger contributors because weaker contributions are getting a "free ride"
federal government
oversees the entire United States and its territories. The clear majority of laws that influence compensation were established at the federal level
Occupational Safety and Health Act of 1970
passed to ensure safe and healthful working conditions for working men and women by authorizing enforcement of the standards under the act
Profit sharing plans
pay a portion of company profits to employees, separate from base pay, cost-of-living adjustments, or permanent merit pay increases. Two basic kinds of these plans are used widely today
current profit sharing
plans award cash to employees, typically on a quarterly or annual basis
deferred profit sharing
plans place cash awards in trust accounts for employees. These trusts are set aside on employees' behalf as a source of retirement income, and can also be considered a long-term incentive
Merit pay
programs assume that employees' compensation over time should be determined, at least in part, by differences in job performance as judged by supervisors or managers
Americans with Disabilities Act of 1990 (ADA)
prohibits discrimination against individuals with mental or physical disabilities within and outside employment settings, including public services and transportation, public accommodations, and employment
Pension programs
provide income to individuals throughout their retirement
job evaluation
recognize differences in the relative worth among a set of jobs and to establish pay differentials accordingly
Horizontal skills or knowledge
refer to similar skills; ex. assembly skills applied to lawn mowers and assembly skills applied to snow blowers.
nonexempt
refers to an employee's status regarding the overtime pay provision of the Fair Labor Standards Act of 1938 (FLSA). Administrative, professional, and executive employees are generally covered from the FLSA overtime and minimum wage provisions
exempt
refers to an employee's status regarding the overtime pay provision of the Fair Labor Standards Act of 1938 (FLSA). Administrative, professional, and executive employees are generally exempt from the FLSA overtime and minimum wage provisions
competency
refers to an individual's capability to orchestrate and apply combinations of knowledge and skills consistently over time to perform work successfully in the required work situations.
spillover effect
refers to nonunion companies' offer of similar compensation as offered by union companies to their employees the goal is to reduce the likelihood that nonunion workforces will seek union representation
Strategic compensation
refers to the design and implementation of compensation systems to reinforce the objectives of both HR strategies and competitive business strategies.
Capital
refers to the factors that enable companies to generate income, higher company stock prices, economic value, strong positive brand identity, and reputation
Depth of skills
refers to the level of specialization or expertise an employee brings to a job
similar-to-me effect
refers to the tendency on the part of raters to judge favorably employees whom they perceive as similar to themselves
Intrinsic compensation
reflects employees' psychological mind-sets that result from performing their jobs, for example, experiencing a great feeling from the belief that one's work matters in the lives of other
Market-competitive pay systems
represent companies' compensation policies that fit the imperatives of competitive advantage Compensation professionals build market-competitive compensation systems based on the results of compensation surveys.
Company stock shares
represent equity segments of equal value; equity interest increases with the number of stock shares held
Pay structures
represent pay rate differences for jobs of unequal worth and the framework for recognizing differences in employee contributions
Interindustry wage differentials
represent the pattern of pay and benefits associated with characteristics of industries Interindustry wage differentials can be attributed to many factors, including the industry's product market, the degree of capital intensity, the profitability of the industry, and unionization of the workforce
Compensation
represents both the intrinsic and extrinsic rewards employees receive for performing their jobs and for their membership as employees
Company stock
represents total equity of a company
Family and Medical Leave Act of 1993 (FMLA)
requires employers to provide up to 12 weeks of unpaid leave for family and medical emergencies
Title I
requires that employers provide reasonable accommodation. Reasonable accommodation for disabled employees may include such efforts as making existing facilities readily accessible, restructuring the job, and modifying work schedules
Group incentive programs
reward employees for their collective performance, rather than for each employee's individual performance
Merit pay programs
reward employees with permanent increases to base pay according to differences in job performance
Pay-for-knowledge
reward managerial, service, or professional workers for successfully learning specific curricula
Job analysis
s a systematic process for gathering, documenting, and analyzing information to describe jobs
Vertical skills
skills that are traditionally considered supervisory skills ex. scheduling, coordinating, training, and leading others
FairPay Rules
specify the criteria for distinguishing between work that is not exempt from the overtime pay provision of the FLSA
Human resource strategies
specify the use of multiple HR practices to reinforce competitive business strategy
longevity pay
systems reward employees with periodic additions to base pay according to employees' length of service in performing their jobs systems reward employees with periodic additions to base pay according to employees' length of service in performing their jobs
sales value of production (SVOP)
the sum of sales revenue plus the value of goods in inventory This is part of the equation to determine payout amounts in Scanlon gain sharing plans
labor hour ratio formula
used in determining the payouts in improshare plans, refers to a standard determined by analyzing historical accounting data to find the number of labor hours needed to complete a product; productivity is then measured as a ratio of standard labor hours and actual labor hours
Skill-based pay
used mostly for employees who do physical work, increases these workers' pay as they master new skills
severance pay
usually amounts to several months' pay following involuntary termination and, in some cases, continued coverage under the employer's medical insurance plan
discretionary benefits
Are benefits that employers offer at their own choice. These benefits fall into three broad categories: protection programs, pay for time not worked, and services.
Line employees
Are directly involved in producing companies' goods or service delivery. Assembler, production worker, and sales employees are examples of these jobs.
Protection programs
Are either legally required or discretionary employee benefits that provide family benefits, promote health, and guard against income loss caused by such catastrophic factors as unemployment, disability, or serious illness.
General Schedule (GS)
Classifies federal government jobs into 15 classifications (GS-1 through GS-15), based on such factors as skill, education, and experience levels. In addition, jobs that require high levels of specialized education (e.g., a physicist), significantly influence public policy (e.g., law judges), or require executive decision making are classified in three additional categories: Senior Level (SL), Scientific & Professional (SP) positions, and the Senior Executive Services (SES).
early retirement programs
Contain incentives designed to encourage highly paid employees with substantial seniority to retire earlier than they planned. These incentives expedite senior employees' retirement eligibility and increase retirement income. In addition, many companies include continuation of medical benefits. early retirement programs
core compensation
Describes the monetary rewards employees receive. Includes two forms of base pay: hourly pay (or wage) and salary. Also includes seniority pay, merit pay, incentive pay, cost-of-living adjustments (COLAs), and pay for knowledge.
hourly pay or wage
Earn hourly pay for each hour worked
Pay grades
Group jobs for pay policy application. Human resource professionals typically group jobs into these based on similar compensable factors and value.
referral plans
Individual incentive pay plans for rewarding the referral of new customers or recruiting successful job applicants
behavioral encouragement plans
Individual incentive pay plans that reward employees for specific such behavioral accomplishments as good attendance.
piecework plans
Individual incentive pay program, rewards employees based on their individual hourly production against an objective output standard, determined by the pace at which manufacturing equipment operates. For each hour, workers receive piecework incentives for every item produced over the designated production standard. Workers also receive a guaranteed hourly pay rate regardless of whether they meet the designated production standard. Some of these individual incentive pay program include a subjective criterion: Quality. This is based on the supervisors' interpretation and judgment.
Compensation surveys
Involve the collection and subsequent analysis of competitors' compensation data.
Brito v. Zia Company
Is a Supreme Court ruling, deemed that the Zia Company violated Title VII of the Civil Rights of 1964 when a disproportionate number of protected-class individuals were laid off on the basis of low-appraisal scores. Zia Company's action was a violation of Title VII because the use of the performance-appraisal system determining layoffs was indeed an employment test. In addition, the Court ruled that the Zia Company had not demonstrated that its performance appraisal instrument was valid.
errors of central tendency
Occur when raters (e.g., supervisors) judge all employees as average or close to average.
contrast errors
Occurs when a rater (e.g., a supervisor) compares an employee to other employees rather than to specific explicit performance standards.
negative halo effect
Occurs when a rater (e.g., a supervisor) generalizes employee's negative behavior on one aspect of the job to all aspects of the job; bias error
positive halo effect
Occurs when a rater (e.g., a supervisor) generalizes employee's positive behavior on one aspect of the job to all aspects of the job; bias error
first-impression effect
Occurs when a rater (e.g., a supervisor) makes an initial favorable or unfavorable judgment about an employee and then ignores or distorts the employee's actual performance based on this impression; bias error
leniency error
Occurs when an appraiser rates all employees high because they don't want to give low scores
strictness errors
Occurs when raters judge employee performance to be less than what it is when compared against objective criteria
job control unionism
Refers to a union's success in negotiating formal contracts with employees and establishing quasi-judicial grievance procedures to adjudicate disputes between union members and employers.
Competitive business strategy
Refers to the planned use of company resources - financial capital, equipment capital, and human capital - to promote and sustain competitive advantage
Services
Represent discretionary employee benefits that provide enhancements to employees and their families
Employee stock option plans
Represent one type of companywide incentives. Companies grant employees the right to purchase shares of company stock.
Cost-of-living adjustments (COLAs)
Represent periodic base pay increases that are founded on changes in prices as recorded by the Consumer Price Index (CPI) enables workers to maintain their purchasing power and standard of living by adjusting base pay for inflation
Pay ranges
Represent the span of possible pay rates for each pay grade. These include midpoint, minimum, and maximum pay rates. The minimum and maximum values denote the acceptable lower and upper bounds of pay for the jobs within particular pay grades.
paid time off
Represents discretionary employee benefits (e.g., vacation time) that provide employees time off with pay.
person-focused pay plans
Reward employees for acquiring job-related, knowledge, skills, or competencies rather than for demonstrating successful job performance rewards employees for the promise of performance in the future
human capital theory
States that employees' knowledge and skills generate productive capital known as human capital. Employees can develop knowledge and skills from formal education and/or on-the-job experiences.
Staff employees
Support the functions performed by line employees. Human resources and accounting are examples of these functions.
Seniority pay
Systems reward employees with permanent additions to base pay periodically, according to employees' length of service performing their jobs
value-added formula
The difference between the value of the sales price of a product and the value of materials purchased to make the product This part of the equation to determine payout amounts in Rucker gain sharing plans
skill blocks model
A kind of pay-for-knowledge program, applies to jobs from within the same job family. Just as in stair-step model, employees progress to increasingly complex jobs; however, skills do not necessarily build on each other in this program.
Cross-departmental models
A kind of pay-for-knowledge program, promote staffing flexibility by training employees in one department with some of the critical skills they would need to perform effectively in other departments
