Exam 2 - MAN 4330

Product market factors

-Degree of Competition -Level of product demand

organization factors

-Industry -Strategy -Size -Individual manager

Maslow's implications for Pay for performance

-base pay must satisfy basic needs to be motivating -when basic needs are met, PFP is motivating.

Expectancy theory - Implications for Pay for performance

-pay must be clearly linked to performance -rewards for performance must be valued/ perceived as significant

Goal-setting theory - Implications for pay for performance

-to maximize motivation, goals should be difficult but obtainable -unobtainable goals may still be associated with high motivation, but they also might come with other downsides (cheating)

Which of the following statement about the two types of work is NOT true?

Employees may favor tacit work because it is less stressful.

Which of the following is NOT a common way that an organization may choose to define competencies?

Factors related to the cost-cutting goals of the company.

If the supply of employees is higher than the demand for employees in a particular job, organizations will be less likely to utilize a lag pay-level policy.

False

The degree of competition that an organization faces for its products/services is a key organization factor that will dictate pay decisions.

False

An employer offering higher base pay with low bonuses is a likely signal that the organization is seeking risk-taking employees.

False, (high base pay, low bonus, no risk / low base pay, high bonus, high risk)

A disadvantage of the classification method is that it may become cumbersome as the number of jobs increases.

False, this is true for ranking.

Which of the following statements is true of a job evaluation plan?

It is developed using benchmark jobs and then applied to nonbenchmark jobs.

KayDen Corp., a small organization with 15 employees, conducts job evaluation using the cheapest method for the first time. In this case, KayDen is most likely to have used the

Ranking Method

Which of the following is linked to high pay levels?

Reduced vacancy rates

The objective of external competitiveness is to base internal pay structure on external "market" rates.

True

The supply of labor will impact the effectiveness of a lag pay-level policy.

True

incentive systems HARM productivity T/F

True

visionary

a global perspective or taking the organization in the new direction

Group incentive and Pro/Con

based on some measure of group performance PRO: fosters teamwork and collaboration; effective in stimulating ideas/problem-solving CON: not always easy to identify the impact of a team, can be difficult to implement, high risk of social loafers

value

captures 1) the relative contribution of jobs to organizational goals and 2) the value of the jobs in the external market

Goal-setting theory

challenging and specific goals generate the most employee effort, better than "do your best" goals or no goals at all.

key factor in turnover

dissatisfaction with pay

breadth

employees in a multi-skill system earn pay increases by acquiring knowledge (generalist)

Merit bonus and Pro/Con

employees receive a bonus that does not build into base pay PRO: because you have to re-earn it every year, it is viewed less of an entitlement; it helps employers by reducing fixed salary costs CON: employees may come to expect them, and base pay wages may not stay competitive if they go unadjusted

Profit sharing plans and Pro/Con

focus on organizational profitability as the standard for incentive PRO: focus on the measure that matters most to the most people - a predetermined index of profitability CON: most employees do not feel their jobs have a direct impact on profits

long term incentive plan and Pro/Con

focus on performance beyond the one-year timeline PRO: motivates long-term value creation; have some tax and defense advantages for organizations (defense against hostile takeover) CON: stock price risk for employees; there is little evidence that stock ownership by employees leads to better firm performance

efficiency wage theory

high wages may increase efficiency and actually lower labor costs if they (1) attract higher quality employees (2) decrease turnover (3) increase worker effort, (4) reduce shirking (slacking, loafing) (5) reduce the need to supervise (monitor) employees.

Which of the following is an assumption held by the labor supply model about the behavior of potential employees?

job seekers do not face barriers to mobility

Marie hired on with a tech company offering the usual benefits but paying below-market rates. She took the job because the company was promising generous stock options and hefty yearly bonuses if goals are met. Plus, they are paying her to relocate to Hawaii! Marie's new employer is using a _____.

lag-pay-level policy

Individual incentive plan and Pro/Con

linked to some objective, preestablished level of performance PRO: easy to justify/track CON: they don't work for every job due to difficulties in identifying objective individual measures of performance

lead pay-level policy

maximizes the ability to attract and retain quality employees and minimizes employee dissatisfaction with pay

Labor market

nature of supply and demand

Ranking

orders the job descriptions from highest to lowest based on a global definition of relative value to the organization's success

skill-based pay is intended to...

pay employees to learn new skills

depth

pay is based on the knowledge of the individual doing the job rather than on the job content or output (specialist)

Lag Pay-Level Policy

paying below market rates may hinder a firm's ability to attract potential employees -May increase commitment with a promise of higher future returns

job-based plan

pays employees for the job to which they are assigned, regardless of the skills they possess (more transactional)

Maslows hierarchy of needs

people are motivated by needs unmet needs motivate - met needs do not

benchmark jobs

prototypical jobs (or groups of jobs) used as a reference point for making pay comparisons inside or outside of the organization

structure

result of job evaluation process

pay level

the average of the array of rates paid by an employer

Expectancy

the belief that effort will lead to performance

instrumentality

the belief that performance will yield outcomes (rewards)

external competitiveness

the organization's pay relative to its competitors

job evaluation

the process of determining the relative worth of the various jobs within an organization

Expectancy theory of motivation

the product of expectancy, instrumentality, and valence (E*I*V)

pay mix

the various types of payments, or pay forms, that make up total compensation

pay-with-competition policy

tries to match wage costs to product competitors and attract applicants equal to the labor market competitors

market pricing

use of market pay data to identify the relative value of jobs based on what other employers pay for similar jobs Primary method of job evaluation

content

what work is performed and how it gets done

Valence

you value the outcomes available

Merit Pay and Pro/Con

(most prevalent) links merit pay increases to how highly employees are rated on performance evaluation PRO: widely accepted and relatively easy to manage CON: can become costly overtime; requires differentiation among performance levels to be effective

Pay mix and pay level focus on 2 main objectives:

1. Control costs and increase revenues (more money) 2. attract and retain employees (more people)

Factors that shape external competitiveness

1. Labor market factors 2. Product market factors 3. Organization factors

Pay for performance plans may include:

1. Merit pay 2. Merit bonus 3. individual incentive 4. group incentive 5. profit sharing 6. Long term incentive

Most traditional job evaluation methods

1. Ranking 2. Classification

5 items used when considering work requiring more tacit knowledge

1. Skills 2. Knowledge 3. Self-concepts 4. Traits 5. Motives

2 types of work

1. Transactional 2. Tacit

4 basic assumptions of the theories of labor markets

1. employers always seek to maximize profits 2. people are interchangeable 3. there is no advantage for a simple employer to pay above or below the market rate 4. The pay rates reflect all costs associated with employment

What percent of organizations tend to use the more traditional "in house" methods of job evaluation?

25% traditional and 75% nontraditional (external market pricing)

On average, which of these do you think is likely to have the biggest impact on an employee's performance?

Ability

Who among the following is most likely to be working for a company that uses a competency-based pay plan?

Carlos, who focuses on obtaining certifications in her field to get a pay increase

Which of the following is a job evaluation method that can group a wide range of work together in one system but may leave too much room for manipulation?

Classification

Which of the following is NOT a disadvantage of the ranking method of evaluation?

Determining classes and writing class descriptions can be a challenge

Skill-based structures

Pay individuals for their skills, regardless of whether the work they are doing requires all or just a few of those particular skills (more tacit)

Which of the following statements is true of pay level?

Pay level is directly proportional to labor costs.

Which of the following is an example of the demand side of labor?

The pay level offered by an employer

Classification

The process of grouping things based on their similarities

Competencies are derived from the ________ beliefs about the organization and its strategic intent.

They employ a reasonable proportion of the workforce

Which of the following is a characteristic of benchmark jobs?

They employ a reasonable proportion of the workforce

Which of the following is the reason why skill-based pay plans have maximum flexibility?

They pay employees for the highest level of skill they have achieved regardless of the work they perform.