MGT FINAL

Comp. time (illegal in the private sector):

FLSA: are hours earned by a public sector nonexempt employees in lieu of payment for extra time worked at a rate of 1.5 times the number of hours over 40 that are worked in a week Comp time is prohibited in a private sector and cannot be legally offered to employees working for private organizations.

Work group or team incentives

Gainsharing: system of sharing with employees greater than expected gains in profits or productivity. Free riders: a member of the group who contributes little

Classification (frequently used in government):

descriptions of job classes are written and then each job is put into a grade according to the class it best matches. A major difficulty with this method is that it is subject to judgements are used to develop the class descriptions and to place jobs accurately.

Elements of executive compensation:

executive salaires, executive benefits, executive perks, annual executive bonuses. Long term incentives, exit packages.

Executive pay gap controversy:

executives are rewarded for growth and pentalized for failure to produce results.

Health

general state of physical, mental and emotional well being

Market line

graph line that shows the relationship between job value as determined by job evaluation points and job value as determined pay survey rates

Compensation fairness

how fair an employee sees their pay can affect their job performance and motivation and in return affect job satisfaction, organizational commitment, absenteeism, turnover, and retention.

Davis-Bacon Act (1931):

include prevailing wage clauses that apply to firms engaged in federal construction projects or that work directly on federal government contracts.

Walsh-Healey Act (1936):

include prevailing wage clauses that apply to firms engaged in federal construction projects or that work directly on federal government contracts.

Risk management:

involves the responsibility to consider physical, human, and financial factors to protect organizational and individual intrests.

Factor-comparison;

is a complex quantitative method that combines the ranking and point factor methods. Organizations that use these methods have to create their own key jobs and factors.

Flexible benefits:

is a program that allows employees to select their benefits they prefer from options established by the employer.

Three levels of variable pay/incentives

ividual: given to reward the effort and performance of each employee. Work group or team: organization rewards an entire group for its performance, cooperation among others may increase. Organizational: reward people based on the performance results of the entire organization.

Internal equity is "built in" through:

job evaluation

Job evaluation

lformal systematic means to determine the relative worth of jobs within the organization.

Point (or point-factor) - most widely used method

looks at compensable factors in a group of similar jobs and assigns weights or points to them. Compensable factor is a job dimension commonly present throughout a group of jobs within a organization that can be rated for each job.

Performance-based

pay adjusted based on the performance an employee shows during a set period.

External equity is "built in" through

pay and compensation surveys

Security

protection of employees and organizational facilities from forces that may harm them

:vs. defined contribution

retirement program in which employers and employee makes an annual payment to an employee's retirement account.

Benchmark jobs

: jobs that are found in many other organizations that can be used for the purpose of comparison.

Reasons organizations offer employee benefits

Attract and retain good workers: Employees and applicants want them

Laws regulating retirement plans: (3)

Employee Retirement Income Security Act (1974) Older Workers Benefit Protection Act (1990): Patient Protection and Affordable Care Act (2010):

Variable pay:

compensation linked directly to individual team or organizational performance

Safety:

condition in which peoples physical well being is protected.

Salary:

consistent payments made each period regardless of the number of hours worked

Red-circled employees Green-circled employees:

Incumbents who is paid above the range set for a job incumbent who is paid below the range set for a job.

Perquisites

Special benefits usually no cash items for executives

Expectancy theory:

States that an employee's motivation is based on the probability that his or her efforts will lead to an expected level of performance that is linked to a valued reward.

Third-party administrator

TPA : A vendor that provides enrollment record keeping and other administrative services to an organization.

Older Workers Benefit Protection Act (1990):

): as an amendment of the ADEA it requires equal treatment for older workers in early retirement or severance situations. Set specific criteris that must be met in older workers are asked to sign waivers promising not to sue for age discrimination in exchange for severance benefits during layoffs.

Occupational Safety and Health Act (1970)

: enacted to ensure that the health and safety of workers would be protected. Every employer that is engaged in commerce and has one or more employees must comply with the act. Farmers with fewer than 10 employees are exempt. Established three agencies • Occupational safety and health administration (OSHA) conducts work inspections and works with companies to improve safety • National Institute for Occupational safety and Health NIOSH is a supporting body that conducts research and develops safety standards • Occupational Safety and Health Review Commission (OSHRC) reviews OSHA enforcement actions and addresses disputes between OSHA and employers that are cited by OSHA inspectors.

Tactics for controlling employer health care costs

Deductibles: money paid by an insured individual before a health plan pays for medical expenses. Copays: the potion of medical expenses paid by an insured individual for medical treatment Managed care: approaches that monitor and reduce medical costs through restrictions and market alternatives.

COBRA:

Consilidated Omnibus Bidget Reconcilation Act requires that most employers with 20 or more ful time emploees and or part time employees offer extended health coverage to certain groups of plan participants. Including: • Employees who are volunairly quit or terminated • Widowed or divorced spouses and dependednt childrems of former and current emploees • Retirees and their spouses and dependent children whose heath coverage ends • Any child who is botrn or adopted by current employee • Other individual involved in the plan such as independent contractors and agents/directors.

Overtime

FLSA established an overtime pay of 1.5 times the regular pay for all hours worked over 40 in a week. Except for exempt employees. The work week is defined as 168 consecutive hours (24 X 7) hospitals and nursing homes are allowed to define their our work week due to the 24/7 work days. Employee work schedules cannot be changed by an employer to avoid paying overtime.

Minimum wage:

FLSA sets a minimum wage to be paid to a broad spectrum of covered employees. The current minimum wage is 7.25 and was set as a part of the fair minimum wage act of 2007. Lower minimum wage hour for tipped employees is 2.13 an hour but total compensation must meet the minimum wage or exceed it. Minimum wage laws vary in different states so employers with employees in different states need to stay aware of each of these laws.

Nonexempt vs. exempt:

FLSA: Exempt employees: employees who hold positions for which they are not paid over time Nonexempt employees: employees who must be paid overtime

Compensation laws (5)

Fair Labor Standards Act (1938): Equal Pay Act (1963): Lilly Ledbetter Fair Pay Act (2009): Davis-Bacon Act (1931): Walsh-Healey Act (1936):

Determining pay increases

HR and managers often work together to communicate pay increases and to help manage perceptions of any changes made to employment compensation. Determined in several ways including performance, seniority, cost of living, across the broad increases, and lump sum increases.

Standards for facilities, equipment, and employee actions:

Hazard communications: process safety management standards that focus on hazardous chemicals. Hazard communications standards require that manufactures, importers, distributors, and users of hazardous chemicals to evaluate, classify, and label those substances using a standardized symbols. Employers must make information about chemicals known to the employees, representatives, and health professionals. This info is contained in the Material Safety Data Sheets MSDS, which must be readily accessible to those who work with the chemicals and certain dangerous substance's. MSDS indicate antidotes and actions that should be taken should someone be exposed to the substance. Personal protective equipment: Standards for personal protective equipment require that employers analyze the job hazards and provide adequate PPE to employees in hazardous jobs and train them to use the PPE. Common items include safety glasses, hard hats, safety shoes. Employers are to provide all employees PPE with no cost who work in a hazardous environment. Bloodborne pathogens: established standard regarding exposure to blood borne pathogens such as hepatitis B virus and the HIV. This was protecting workers who commonly come in contact with blood and other substances from contracting AIDS and other serious diseases. Protective equipment such as gloves, masks and proper training of handling of bodily fluids are important precautions that help spreading infectious diseases.

Pay level strategies

LAG, match, lead , job evaluation

Characteristics of effective variable pay

Link goals and employee performacncd, enhance results and reward employees, recognize levels of performance through rewards, achieve objectives (retention, turnover, training, safety.) reduce fixed cost

Family and Medical Leave Act (1993):

Llaw requires employers to allow eligible employees to take a maxmimum of 12 weeks of unpaid job protected leave during and 12 month period for the folling situations: • Birth of a child and care for a newborn within one birth year • Adoption or foster care placement of a child • Caring for a spouse, child, or parent with a serious health condtion • Sereious health condition of the employee • Military family memebrs who must handle the affairs for military mebers called to active duty.

Types of individual incentives

Monetary and non monentary

Patient Protection and Affordable Care Act (2010

PPACA: alter the involvement of employers in providing these essential benefits. READ

Across-the-board:

usually given as a percentage raise based on standard market or financial budgeting determinations. All employees get the same percentage pay increase and they should atate cleary what portion is performance and what protion is automatic.

Special issues in employee benefits: (2)

Part-time employees: many employers do not give benefits to part time employees, except some paid time off. Part time employees are most likely to receive retirement benefits and least likely to receive medical care and life insurance benefits. Domestic partner benefits: many states don't recognize the same sex marriage and therefore don't give domestic partner benefits. While insurance issuers cannot deny coverage to same sex spouses even in states where same sex marriage is not legal employers can elect to offer benefits that do not cover these individuals. Employers have to offer same benefits to same sex couples that are offered to normal couples under federal law.

Non-monetary

Performance awards: merchandise, gift certificates, and travel are the most frequently used incentives for performance awards. Cash is highly valued by employees because they can choose how to spend it. Recognition awards: recognizes individual's employees for their work. Many organizations in industries such as hotels restraints, and retailers have established employee of the month or employee of the year rewards. Service awards: recognize and reward longevity with the company/ many firms recognize length of service such as one year, five, ten, and so sometimes they give cash wards rather than non-cash awards. Some give gift cards to retailers or restruants and then some give things such as ipads, televisions, and other technology gifts.

Individual incentives Necessary conditions for individual incentives to work

Performance is identifiable: the performance of the individual must be such that it can be identified and measures. Each employee must have job tasks that can be separate from other employees. Individual competitiveness is desirable: since individuals generally will compete with their coworkers for incentives for themselves, employers have to accept the fact that some employees will win and some will lose. Individualism is stressed: in the organizational culture. Must emphasize individual growth achievements, and rewards. Individuals are in control of the pace of their work: each employee should have the ability to increase or decrease effort and inputs to generate a particular level of performance.

Types of pay adjustments

Performance-based COLA increases: Across-the-board: Seniority

Monetary (4)

Piece rate: pay system in which wages are determined by multiplying the number of units produced by the piece rate for on unit. Differential piece rate: pays employees one piece rate wage for units produced up to a standard level of output and a higher piece rate wage for units produced over the standard. Bonus: one-time payment that does not become part of the employee's base pay. Sales commissions (pp. 466-470): the compensation given to sales employees is entirely tied to individual sales performance. The intent is to sale more beneifiting employees and their employers.

Job evaluation methods

Point (or point-factor) - most widely used method Classification (frequently used in government): Factor-comparison;

Procedural and distributive justice:

Procedural justice: perceived fairness of the process and procedures used to make decisions about employees, including their pay. Distributive justice: perceived fairness of how rewards and other outcomes are distributed.

Organization-wide incentives

Profit sharing: system to distribute a portion of an organizations profits to employees. Employee stock purchase plans: gives employees the right to purchase a fixed number of shares in the company stock at a specified price for a limited period.

Legally required benefits

Social security/medicare: Social security act of 1935 and its later amendments established a system to provide old age survivors disability and retirement benefits Administrated by the federal government through the social security administration, this program provides beneftis to individuals who previously worked. Social Secuirty: employees and employers share the cost in social security through a tax on employeeswages or salries. It is a politically sensitive program. Medicare: government operated health insurance program for americans age 65and above and for citizes with diabilites. Medicare is funded by tax on employers and amployees. Worker's compensation: security benefits provided to workers who are injured on the job Unemployment compensation: was established as part of the SSA of 1935 to provide minimum benfits for workers who are out of work.

Compensation

Tangible awards: elements of compensation that can be quantitatively measured and compared between different organizations Intangible awards: elements of compensation that cannot be as easily measured or quantified

Reasons employees and applicants often prefer benefits over increased pay (from class)

Tax-favored status of benefits: providing employees with benefits rather than wages can be advantageous for employees. Most benefits are not taxed as income to employees but the company could deduct the cost as a business expense. Group rates: Quantity discount (as part of a larger group)

Compensable factors:

compensable factor is a job dimension commonly present throughout a group of jobs within a organization that can be rated for each job.

Pay grades:

grouping of individual jobs that have approximately the same value to the organization.

Americans with Disabilities Act (ADA):

have to accomadate in order for the essential job functins to be completed.

COLA increases:

whereby every employees pay is increased to compensate for inflation and rising process. Often adjustments are tied to changes in the consumer price index CPI or some toher economic measure.

Variable pay and incentives

Variable pay: compensation that is tied to performance Incentives: tangible rewrads that encourage or motivate action.

Garnishment:

a court order that directs an employer to set aisde a portion of an employee's wages to paydebt owned to a creditor.

Three-legged stool:

a model showing the three sources of income to fund an employees retirement

Retirement plans:

a program established and funded by the employer and employees to fund employees retirement.

Portability

a retirement plan feature that allows employees to move their retirement benefits from one employer to another.

Benefits:

a tangible indirect reward provided to an employee or group of employees for organization membership.

Open enrollment:

a time when employees can change their participation level in various benefit plans and switch between benefit options.

Clawback (under the Dodd-Frank Act):

allow for the recovery of incentive based pay that was provided to executives and later determined to have been paid under false pretenses.

Lag:

an employer using a first quartile strategy is using a lag the market strategy by paying below the market for several reasons. If the employer is experiencing financial difficulties, when abundance of workers is high particularly with lower skills, a below the market approach can be used to attract sufficient workers at a lower cost. This strategy increase a high worker turnover and low employee morale

Prevailing wage rate:

an hourly wage determined by a formula that considers the rate paid for a job by a majority of the employees in the appropriate geographic area.

Work assignments and reproductive health

assigning employees to work in areas where their ability to have chidren may be affected by exposure to chemical hazards and radiation is an issue. Employers should not prevent women or men from working in hazardous jobs because of reproductive concerns. Although employers have no absolute protection from liability the following actions can help • Maintain a safe workplace for all by seeking the safest working methods • Comply with all state and federal state laws • Inform employees about any known risks • Document employee acceptance to any risks.

Pay for performance philosophy

assumes that compensation decisions reflect performace differences.

Base pay:

basic compensation that an employee receives often as an hourly wage or salary

Vesting:

benefit that cannot be taken away

Individual, group, and organizational incentives:

bonuses, incentive program payments, equity awards, and commissions.

Pay surveys:

collection of data of compensation rates for workers performing similar jobs in other organizations.

External equity:

if an employer's rewards are not viewed as equitable compared to other organizations the employer is Likert to experience high turnover. Also, results in difficulty recruiting qualified and high demand individuals. Organizations can track external equity by using pay surveys and looking at compensation policies of competing employers.

Benefits:

indirect reward given to an employee or group of employees as part of membership in the organization regardless of performance.

Internal equity:

internal equity means that employees are compensated fairly within the organization with regard to KSAs they use in their jobs as well as their responsibilities, accomplishments, and job performance. Employees evaluate their ratio of effort to reward in comparison to coworkers on an ongoing basis. These evaluations often affect how willing employees are to make valuable contributions to the organization.

Pay compression

occurs when the pay differences amounts between individuals with different levels of experience and performance become small

Pay ranges

once pay grades are determined the pay range for each pay grade must be established using the market line as a starting point the employer can determine minimum and maximum pay levels for each pay grade by making the market line the midpoint of the line of the new pay structure.

Pay secrecy:;

pay information that may be kept secret in a closed system relates to information about individual pay amounts, pay raises, and incentive payouts. Some firms have polices that forbid employees from discussing their pay with other employees and violation of these policies can lead to disciplinary actions. Having a secret pay system raises questions and employees are more likely to feel as if the system if equitable if pay systems are open and explained well.

Wage:

payments calculated directly based on time worked by employees

401(k) plans

plan allows for a percentage of an employees pay to withheld and invested in a tax deferred account

Equal Pay Act (1963

prohibits companies from using different wage scales for men and women performing substantially the same jobs pay differences can be justified on a basis of merit, sonority, quantity or quality of work, experience, and factors other than gender.

Fair Labor Standards Act (1938):

provisions are enforced by the wage and hour division of the U.S. Department of Labor. Penalties include awards of up to two years of pack pay for affected current and former employees along with monetary penalties. Willful violations may be penalized for up to three years of back pay. Enacted minimum wage, child labor laws, and exempt and non-exempt employees.

Employee Retirement Income Security Act (1974):

purpose is to ensure that private pensions plans and other plans governed by the ERISA meet minimum standards. ERISA requires plans to periodically provide participanyts with information about plan features ushc as vesting, funding \, and bebefit accrual amounts.

Dealing with out-of-line pay rates:

red circle employees: fatest way is to cut the employees pay (not recommended), pay can be frozen until pay range is adjusted upward, is to give employee a small lump sum payment but not adjust the pay rate when others are given raises. Green Dot employees: receive a fair pay rapidly to meet the minimum pay range.

Defined benefit

retirement program in which employees are promised a pension amount based on age and years of service.

Match:

second quartile strategy uses a middle of the market as determined by pay data from surveys of other employers' compensation plans. Choosing this level is an attempt to balance employer cost pressures and the need to attract and retain employees by providing compensation levels that meet the market for company jobs.

Child labor:

set by FLSA set the minimum age of employment with unlimited hours to 16. For hazardous occupations, the age is 18. Individuals who are 14 and 15 year as old may work outside of school hours with certain limitations. Age certifications are often used for employers to identify a person ages.

Exit packages:

severance packages and pension payments may not ordinarily make the headlines, special executive compensation for separation agreement and payouts as the executives is leaving is controversial.

Lilly Ledbetter Fair Pay Act (2009):

signed in 2009 in response to the us supreme court decision restricting the statute of limitations allowed under the equal pay act for claiming discrimination based on sex. Under the equal pay act an employee had 300 days to claim discrimination the fair pay act essentially treats the each new paycheck as a discrimination. Steps to reduce liability conducting periodically disparate analysis of compensation plans, properly document all compensation decisions, retain pay records for appropriate duration, and limit discretion in pay decisions to higher levels of the organization.

Equity theory:

states that individuals judge fairness in compensation by comparing their inputs and outcomes against the inputs and outcomes of referent others.

OSHA

the federal agency overseeing safety and health in the workplace

Lead:

third quartile uses an aggressive approach to lead the market. Enables the company to attract and retain sufficient workers with required capabilities and be more selective when hiring. Employers often look for ways to increase productivity for employees who are paid over the market standard.

Seniority

time spent in an organization or working a particular job, can be used on the basis of pay increases. Many companies have policies that employees have to work for a certain period of time before they can have pay increases. Often automatic steps depending on satisfactory performance during the required length of time

Worker's compensation:

under these laws employees purchase insurance to compensate employees for injuries received on the job. Workers compensation coverage in many states include emotional impairment that may have resulted from a ohysical injury as well as job related strain, stress, anxiety, and pressure. Even if the employee is under at home work and gets injured the employer can be laible.