MGT 313 Exam 3 Study Guide

LO 10-7 Explain how to provide performance feedback effectively.

- "Tell-and-sell": approach, managers tell their employees their ratings and then justify those ratings. - "Tell-and-listen": approach, managers tell employees their ratings and then let the employees explain their side of the story. - "Problem-solving": approach, managers and employees work together to solve performance problems in an atmosphere of respect and encouragement.

LO 14-1 Discuss the importance of benefits as a part of employee compensation.

- Attractive to potential employees - Common in today's society - Meeting requirements result in more favorable tax treatment

LO 13-5 Describe how organizations combine incentive plans in a "balanced scorecard."

- Balanced scorecard: a combination of performance measures directed toward the company's long- and short-term goals and used as the basis for awarding incentive pay. A corporation would have financial goals to satisfy its stockholders (owners), quality- and price-related goals to satisfy its customers, efficiency goals to ensure better operations, and goals related to acquiring skills and knowledge for the future to fully tap into employees' potential.

LO 14-7 Explain how to choose the contents of an employee benefits package.

- Cafeteria-style benefits plan: This custom-selection option is an employee benefit plan that allows your employees to choose among a variety of offerings to create a benefits package that best meets their needs and those of their family.

LO 13-6 Summarize processes that can contribute to the success of incentive programs.

- Communication and employee participation can contribute to a belief that the organization's pay structure is fair. In the same way, the process by which the organization creates and administers incentive pay can help it use incentives to achieve the goal of motivating employees. According to employees, other factors besides the pay itself were important—especially the ability to influence and control the way their work was done. - Considerations such as these are especially important in today's economic environment, where compensation budgets tend to be limited.

LO 14-5 Define the types of retirement plans offered by employers.

- Employee Retirement Income Security Act of 1974: is a federal law that sets minimum standards for most voluntarily established pension and health plans in private industry to provide protection for individuals in these plans. The Pension Benefit Guaranty Corporation (PBGC) is a United States federally chartered corporation created by the Employee Retirement Income Security Act of 1974 Defined-Contribution Plans. - Money Purchase Plan: employers are required to make annual contributions to each employee's account regardless of the company's profitability for the year. (Example 10% of salary) - Profit-sharing and employee stock ownership plan: employees buy stock in their company through payroll withholding or some other method, or the corporation contributes shares of its stock to funds that allocate the shares to employees based on their annual compensation - 401k: is a retirement savings plan sponsored by an employer. It lets workers save and invest a piece of their paycheck before taxes are taken out. Taxes aren't paid until the money is withdrawn from the account.

LO 14-6 Describe how organizations use other benefits to match employees' wants and needs.

- Family Leave - Child Care - College Savings

LO 10-3 Define five criteria for measuring the effectiveness of a performance management system.

- Fit with strategy: A performance management system should aim at achieving employee behavior and attitudes that support the organization's strategy, goals, and culture. - Validity is the extent to which a measurement tool actually measures what it is intended to measure. In the case of performance appraisal, validity refers to whether the appraisal measures all the relevant aspects of performance and omits irrelevant aspects of performance. - Reliability: With regard to a performance measure, reliability describes the consistency of the results that the performance measure will deliver. Inter-rater reliability is consistency of results when more than one person measures performance. - Acceptability: Whether or not a measure is valid and reliable, it must meet the practical standard of being acceptable to the people who use it. - Specific feedback: A performance measure should specifically tell employees what is expected of them and how they can meet those expectations.

LO 13-3 Identify ways to recognize group performance.

- Gainsharing: measures increases in productivity and effectiveness and distributes a portion of each gain to employees. Things needed for Gainsharing - Management commitment - Need for change or strong commitment to continuous improvement - Management acceptance and encouragement of employee input - High levels of cooperation and interaction - Goal setting - Commitment of all involved parties to the process of change and improvement - Performance standard and calculation that employees understand and consider fair and that is closely related to managerial objectives - Employees who value working in groups - Scanlon Plan: gives employees a bonus if the ratio of labor costs to sales value of production is below a set standard. To keep this ratio low enough to earn the bonus, workers have to keep labor costs to a minimum and produce as much as possible with that amount of labor.

LO 10-4 Compare the major methods for measuring performance.

- Graphic rating scale: This method lists traits and provides a rating scale for each trait. The employer uses the scale to indicate the extent to which the employee being rated displays the traits. The rating scale may provide points to circle (as on a scale going from 1 for poor to 5 for excellent), or it may provide a line representing a range of scores, with the manager marking a place along the line. - Forced-distribution method: This type of performance measurement assigns a certain percentage of employees to each category in a set of categories. - Paired-comparison method: This approach involves comparing each employee with each other employee to establish rankings. Suppose a manager has five employees, Allen, Barbara, Caitlin, David, and Edgar. - Simple ranking: requires managers to rank employees in their group from the highest performer to the poorest performer. In a variation of this approach, alternation ranking, the manager works from a list of employees. First, the manager decides which employee is best and crosses that person's name off the list. From the remaining names, the manager selects the worst employee and crosses off that name.

LO 14-4 Identify the kinds of insurance benefits offered by employers.

- Health Maintenance Organization (HMO): a health insurance organization to which subscribers pay a predetermined fee in return for a range of medical services from physicians and healthcare workers registered with the organization. - Preferred Provider Organization (PPO): A type of health plan that contracts with medical providers, such as hospitals and doctors, to create a network of participating providers. You pay less if you use providers that belong to the plan's network - Flexible Spending Account: is a special account you put money into that you use to pay for certain out-of-pocket health care costs. You don't pay taxes on this money. This means you'll save an amount equal to the taxes you would have paid on the money you set aside.

LO 9-1 Define high-performance work systems, and identify the elements of such a system.

- High-performance work systems, with the right combination of people, technology, and organizational structure to make full use of resources and opportunities in achieving their organizations' goals. To function as a high-performance work system, each of these elements must fit well with the others in a smoothly functioning whole.

LO 9-2 Summarize the outcomes of a high-performance work system.

- Higher productivity and Efficiency. These outcomes contribute to higher profits. A high-performance work system may have other outcomes, including high product quality, great customer satisfaction, and low employee turnover. Some of these outcomes meet intermediate goals that lead to higher profits

LO 9-6 Summarize ways to measure the effectiveness of human resource management.

- In recent years, human resource management at some organizations has responded to the quest for total quality management by taking a customer-oriented approach. For an organization's human resource division, "customers" are the organization as a whole and its other divisions. They are customers of HRM because they depend on HRM to provide a variety of services that result in a supply of talented, motivated employees.

LO 13-1 Discuss the connection between incentive pay and employee performance.

- Incentive pay: that is, pay specifically designed to energize, direct, or maintain employees' behavior. Incentive pay is influential because the amount paid is linked to certain predefined behaviors or outcomes. For example, as we will see in this chapter, an organization can pay a salesperson a commission for closing a sale, or the members of a production department can earn a bonus for meeting a monthly production goal.

LO 9-4 Explain how human resource management can contribute to high performance.

- Job design can enable the organization to benefit from teamwork and employee empowerment, two of the work conditions associated with high performance. Job design aimed at empowerment includes access to resources such as information technology. - Recruitment and selection aim at obtaining employees who are enthusiastic about and able to contribute to teamwork, empowerment, and knowledge sharing. Qualities such as creativity and the ability to cooperate as part of a team may play a large role in selection decisions.

LO 10-8 Summarize ways to produce improvement in unsatisfactory performance.

- Lack of ability: When a motivated employee lacks knowledge, skills, or abilities in some areas, the manager may offer coaching, training, and more detailed feedback. Sometimes it is appropriate to restructure the job so the employee can handle it. - Lack of motivation: Managers with an unmotivated employee can explore ways to demonstrate that the employee is being treated fairly and rewarded adequately. The solution may be as simple as more positive feedback (praise). Employees may need a referral for counseling or help with stress management. - Lack of both: Performance may improve if the manager directs the employee's attention to the significance of the problem by withholding rewards or providing specific feedback. If the employee does not respond, the manager may have to demote or terminate the employee.

LO 14-8 Summarize the regulations affecting how employers design and administer benefits programs.

- Legal treatment of men and women includes equal access to benefits, so the organization may not use the employee's gender as the basis for providing more limited benefits. That is the rationale for the Pregnancy Discrimination Act, which requires that employers treat pregnancy as it treats any disability.

LO 9-5 Discuss the role of HRM technology in high-performance work systems.

- New technology usually involves automation and collaboration—that is, using equipment and information processing to perform activities that had been performed by people and facilitating electronic communication between people. Over the last few decades, automation has improved HRM efficiency by reducing the number of people needed to perform routine tasks. - Transaction processing: refers to computations and calculations involved in reviewing and documenting HRM decisions and practices. It includes documenting decisions and actions associated with employee relocation, training expenses, and enrollments in courses and benefit plans. - Decision support systems are computer software systems designed to help managers solve problems. They usually include a "what if?" feature that managers can use to enter different assumptions or data and see how the likely outcomes will change. - Expert systems are computer systems that incorporate the decision rules used by people who are considered to have expertise in a certain area.

LO 14-9 Discuss the importance of effectively communicating the nature and value of benefits to employees.

- Organizations must communicate benefits information to employees so that they will appreciate the value of their benefits. This is essential so that benefits can achieve their objective of attracting, motivating, and retaining employees.

LO 14-3 Describe the most common forms of paid leave.

- Paid Personal Days - Sick Leave

LO 10-5 Describe major sources of performance information in terms of their advantages and disadvantages

- Peers - Subordinates - Customer

LO 10-6 Define types of rating errors, and explain how to minimize them.

- People often tend to give a higher evaluation to people they consider similar to themselves. - If the rater compares an individual, not against an objective standard, but against other employees, contrast errors occur. - Calibration meeting: a gathering at which managers discuss employee performance ratings and provide evidence supporting their ratings with the goal of eliminating the influence of rating errors.

LO 13-2 Describe how organizations recognize individual performance.

- Piecework rate: a wage based on the amount they produce. The amount paid per unit is set at a level that rewards employees for above-average production volume. - Straight piecework plan: the employer pays the same rate per piece no matter how much the worker produces. - Differential piece rates (also called rising and falling differentials): in which the piece rate depends on the amount produced. If the worker produces more than the standard output, the piece rate is higher. If the worker produces at or below the standard, the amount paid per piece is lower.

LO 14-2 Summarize the types of employee benefits required by law.

- Social Security: old age insurance, retirement - Unemployment Insurance: provides lost employment during involuntary unemployment and helps seek employment. - Workers Compensation: help workers with expenses of on the job related injuries. - Unpaid Family and Medical Leave: 12 weeks of unpaid after childbirth or adoption, the employee may take up to 26 weeks unpaid leave under FMLA - Patient Protection and Affordable Care Act: complex packages of health care.

LO 10-2 Discuss the purposes of performance management systems.

- Strategic purpose of effective performance management is to help the organization achieve its business objectives. It does this by helping to link employees' behavior with the organization's goals. - Administrative purpose of a performance management system refers to the ways in which organizations use the system to provide information for day-to-day decisions about salary, benefits, and recognition programs. - Developmental purpose: it serves as a basis for developing employees' knowledge and skills. Even employees who are meeting expectations can become more valuable when they hear and discuss performance feedback.

LO 9-3 Describe the conditions that create a high-performance work system.

- Teams perform work. - Employees participate in selection. - Employees receive formal performance feedback and are actively involved in the performance improvement process. - Ongoing training is emphasized and rewarded. - Employees' rewards and compensation relate to the company's financial performance. - Equipment and work processes are structured, and technology is used to encourage maximum flexibility and interaction among employees. - Employees participate in planning changes in equipment, layout, and work methods. - Work design allows employees to use a variety of skills. - Employees understand how their jobs contribute to the finished product or service. - Ethical behavior is encouraged.

LO 13-4 Explain how organizations link pay to their overall performance.

- These organization-level incentives can motivate employees to align their activities with the organization's goals. At the same time, linking incentives to the organization's profits or stock price exposes employees to a high degree of risk.

LO 13-7 Discuss issues related to performance-based pay for executives.

- To encourage executives to develop a commitment to the organization's long-term success, executive compensation often combines short-term and long-term incentives. Short-term incentives include bonuses based on the year's profits, return on investment, or other measures related to the organization's goals. - The rationale for these long-term incentives is that executives will want to do what is best for the organization because that will cause the value of their stock to grow.

LO 10-1 Identify the activities involved in performance management.

- to individual employees as well as to the organization as a whole. Effective performance management can tell top performers they are valued, encourage communication between managers and their employees, establish consistent standards for evaluating employees, and help the organization identify its strongest and weakest employees. To meet these objectives, companies must think of effective performance management as a process, not an event.