MGT 404 Final Exam

decentralized compensation structure

business units design administer their own system

Goal setting theory

challenging performance goals influence greater intensity and duration in employee performance; employees must believe they can influence performance targets

Scientists and engineers

changing over time and not as unique as they used to be; big focus on perks and work environment (in order to be creative; bigger increases at the beginning of their career); foster collaboration

HMO's (health maintenance organization)

closed network of providers agreed to go to certain providers primary care physician gave all referrals- gatekeeper introduces co-pays covers preventative services

profit sharing plans

comapnywide; focus on predetermined index of profitability; most employees feel as though they do not have a direct impact

ranking format

comparing people to each other to determine relative ordering of the group on some performance measure;

spillover error

continuing to downgrade an employee for performance in prior rating periods

fee for service plans

decent coverage from employer low cost, covered if something went wrong, no preventative care not too expensive for employers

two tier wage plans

differentiate pay based on hiring date; tiers can be used as a cost control strategy to allow expansion or as a cost-cutting device to allow economic survival

other misc benefits

discounts gym memberships child care centers legal advice

Horn error

downgrading an employee across all performance dimensions exclusively because of poor performance in one dimension

risk sharing

base pay is reduced relative to the level offered in a success sharing plan; shift part of the risk from company to employee

exec pay mix

base, short term incentives, long term incentives, benefits, perks

individual incentive plans

based on units of production per time period or time period per unit; offer a promise of pay for some objective, pre-established level of performance; all plans use an established standard for comparing worker performance to determine magnitude of the incentive pay

straight piecework

based on what your produce; for every unit you sell you get the same bonus

performance plans

driven by financial earnings or return measures pay for meeting or exceeding specific goals performance shares and performance units

benefits model

drives desired employee behaviors

401K plan

employee can save pre-tax (and after tax) employers may match some/ all of employee contributions employer contributions may have vesting periods employee contributions immediately vested portable (take it when you quit) some companies allow loans

success sharing

employee pay is constant; variable pay adds on during successful years

Herzberg's two-factor theory

employees are motivated by two motivators hygiene factors and satisfiers; pay level is important- must meet min requirements before performance-based pay can operate as a motivator

subordinates

employees want anonymous submissions, leaders should use feedback to modify their behavior

spillover effect

employers avoid unionization by offering wages, benefits and conditions won ununionized firms; avoid union interference decision making and workers enjoy rewards occurs less often as union power diminishes

tax changes with Obama Care

employers with cadillac health coverage will be taxed on value of plans above a threshold level beginning in 2018

-employee development criterion -administrative criterion -personnel research criterion -economic (cost) criterion -validity criterion

evaluating performance appraisal formats

change

everything you're doing is consistent with culture

360 degree feedback

feedback from peers, manager, self, subordinates and customers

defined benefit plan

fixed or planned benefit upon retirement paid by employer the amount determined by: years of service and salary vesting ERISA

Gainsharing

focus on cost reduction; designed to get people to come up with cost saving ideas; pay offs for teams defined at the level of a strategic business unit

long term incentives

focus on performance beyond one year;

Equal employment opportunity

forces organizations to document decisions to ensure they are firmly tied to performance or expected performance

Employee stock ownership plans

generate long term effects; fairly popular; foster employee willingness to participate in the decision- making process; have little impact on productivity or profit; expiration date

contracts with unions

give the basis of pay (hourly and overtime pay, premium pay and pay schedule) specify occupation wage ranges differential provisions vacation/holiday entitlements

clone error

giving better ratings to individuals who are like the rater in behavior and/or personality

Halo error

giving favorable ratings to all job duties based on impressive performance in just one job function

leniency error

giving people higher ratings than deserved

strictness error

giving people lower scores than deserved

1. FMLA 2. worker's compensation 3. unemployment insurance 4. social security 5. healthcare

government required benefits

central tendency error

grouping too many people in the middle

centralized compensation structure

headquarters designs and administers the compensation system

expectancy theory

i believe if i work hard i can get the desired level of performance, if i get that i believe i will get certain outcomes and then how do i value those outcomes

worker's compensation

injuries on the job

Pay model

internal alignment external competitiveness employee contributions management

Murphy's benefits model

internal fairness external competitiveness drive desired employee behaviors cost effective management

first impression error

snap judgement; developing negative or positive opinion of an employee early on in the review period and allowing that to negatively or positively influence all later perceptions

self others work itself

sources of feedback

high deductible healthcare plan

specific type of PPO; the deductible must be at least single in 2017 $1300 and $2600 for family out of pocket max $6550 for single free preventative care allows you to go on an HSA

reopener clause

specified wages will be renegotiated at a specified time or conditions

special groups

strategically important to the company and their positions hold built in conflict

customer as rater

surveys and mystery shoppers rate performance

group incentive plans

team performance is measured against a set standard to determine incentive pay

managing labor costs and revenues

the cost implications of actions is critical for making sound decisions

Halsey 50/50 method; rowan plan; Gantt plan

the standard time for the completion of a job and the rate per hour is fixed; In case, the worker completes the work in less than the standard time; then he is entitled to a bonus along with the time wages

Peers as raters

they have an undistorted perspectives, however, they have no rating experience and are very lenient

self as rater

they have complete knowledge of performance, yet are most lenient; used for development rather than administrative

Supervisors as raters

they have experience rating employees and know the job requirements, however, they are prone to leniency errors

Merit bonuses

thought to be substitute for merit pay; based on performance and received as an end of year bonus; not built into base pay; can be less expensive than merit pay in the long run

compa ratio

to assess how pay relates to the midpoint we use this index; avg rate actual paid/ range midpoint

budget control: top-down

top management sets an estimated pay increase budget for the whole organization; typical approach is planned-pay level rise

attract, retain and motivate performance employees misperceive pay system

two reasons to communicate pay information

unemployment insurance

typically, state-run, paid premiums if there is a layoff, you can get help while you look for another job

Management by objectives

uses outcomes as the standards of performance measure; performance objectives-results; most common with some combo of behavioral scales

time off

vacation holidays leaves of absences flexible scheduling

defined contribution plan

variable/ unknown payout at retirement-- result of invest choices/ market performance defined: what goes in (contributions by employee and employer)

insurance

vision dental life disability long term care

long term care plans

waiting period (you pay for first 'x' number of days) daily or monthly benefit amount benefits period (number of years covered) inflation protection option

Patient and protection affordable care act (Obama care)

wanted to get more people covered (individual mandate + no insurance = penalty) expands medicaid majority of people are covered through employers large employers have to provide insurance or they will pay fees small employers- if they purchase health insurance for employees they get a tax credit

PPO (preferred provider organization)

what most employers have must pay premiums- out of paycheck cost vision and dental are usually separate preventative services-free prescription drugs usually have a co-pay

-behaviors observed -competition among departments -organization values -status difference between departments -economic conditions

what performance ratings are influenced by

rating format

when adjectives are used as anchors; requires raters to evaluate employees against a standard rather than each other

out of pocket expenses

when you use the insurance; co-pays deductibles co-insurance

tournament theory

where wage differences are based not on marginal productivity but instead upon relative differences between the individuals

administration

who is covered? communication decisions how much choice how financed cost containment

differentiate yourself from other companies government required tax favored treatment of many benefits economies of scale unions mid-20th century, post war wage and price controls

why offer benefits

retention sense of ownership

why pay long term incentives

essay format

written letter from boss as to what went well and what didn't; supervisors answer open-ended questions describing employee performance

social security

6.2% is capped at $127,200; employers match 7.65% your pay

Behavioral anchored scales

seems to be most common format using behaviors as descriptors;

pay for performance plan

signals a movement away from entitlement toward pay that varies with performance

compensation promotions terminations/layoffs training selection/hiring

HR administrative decisions based off of performance management

key elements in a good appraisal

- culture and strategy determine measure factors -involve employees in all stages of the process -raters should be trained and motivated -raters should maintain a diary -raters should conduct a pre-diagnosis -feedback must be timely

key elements of gain sharing

- strength of reinforcement - productivity standards - sharing the gains - scope of the formula - perceived fairness of formula - ease of administration - production variability

Reasons for performance management

-motivation -developmental -administrative -strategic

dimensions of the union impact on the structuring of wage packages

-the division between direct wages and employee benefits -the evolution of two-tier wage plans

union role in wage and salary administration

1. declining industries are unionized, growing industries, less so 2. workers do not see unions as solution 3. reduced union organizations efforts 4. management is taking increasingly hard stance against unions in general and union demands in particular

performance appraisal cycle

1. goal setting 2. feedback and coaching 3. rewards and reinforcement

retirement savings

401k pensions

taylor differential piece rate system

Merrick multiple piece-rate system- no longer one to one ratio- for every 5 cars you get 100 and then after that you get an additional 50

recency error

allowing performance at the end of review period play too large of a role in determining an employee's rating for an entire period

base pay and variable pay

avg cash compensation and average benefit cost

Balanced scorecard approach

looks at what contributes value in an organization; success depends on satisfied customers and employees;

Supervisors pay mix

meet demands of upper management and the needs of employees; equity is major compensation challenge; One compensation strategy puts base salary of supervisors at an amount exceeding the top-paid subordinate; Other methods are to pay supervisors for scheduled overtime or to use variable pay

Merit pay

most basic way to pay individuals; links increases in base pay to how highly employees are rated on a performance evaluation; employee achievements are rewarded every year then employee remains on the job; small but significant impact on performance; some say it doesn't achieve desired goal

equity theory

motivated if they feel like they are being paid fairly; get out what you put in; most communicate effectively or employees will make assumptions; influence perception of fairness based on communication

variable pay

must be re-earned each period; control based on performance

deferred wage increase

negotiated at initial contract with timing and amount specified

sales compensation strategy

new customers or retention; paid on value or margin; is customer satisfaction important to compensation

stock awards

no expiration date; a grant of company stock in which the recipient's rights are restricted until the shares vest

family medical leave act

not paid, just time off

sales

not strictly an HR compensation work- shared between HR and marketing usually to find different mix; base and commission

core and contingent

number of workers and hours worked

labor costs

number of workers and hours worked X (avg cash compensation + avg benefit cost)

broad bands

offer managers flexibility; may be more about career management than pay decisions

Performance review

one is to guide allocation of merit increases; used in a wide variety of decisions

individual spot awards

only 35 percent of companies use them; 74 percent said effective; usually rewarded for exceptional performance

Health care benefits- annual cycle

open enrollment -timeframe -communications -choices -discount -enrollment measures

flexible spending account

optional; allows you to set aside re-tax money to cover out of pocket healthcare expenses make annual decision as to how much you want to set aside use it or lose it new employer can allow either $500 rollover or some employers extend the time frame for using it to March 15 next year

standard hour and bedeaux plans

pay you for how long it should have taken you to produce in that short time period

agency theory

people act in their interest for their outcome- must be in company's best interest; incorporates the political motivations in the corporate world

Maslow's need hierarchy

people are motivated by inner needs; needs form a hierarchy from most basic to high order; performance based pay may be demotivating if it impinges upon employee's capacity to meet needs

cost of living adjustment

periodic adjustments based on changes in the consumer price index

poorly defined goals, unsure how performance is evaluated, no guidance on how to improve, no differences among good-negative-poor performances

problems with feedback

balanced scorecard bonus program

profit revenue customer satisfaction inventory turnovers employee satisfaction

changes that came from Obama care

provides coverage for dependent children up to age 26 prohibits insurers from rescinding coverage prohibits annual/lifetime limits on coverage prohibits pre-existing condition exclusions for children and later adults as well requires certain preventative services be provided without charge requires qualified coverage to meet certain min coverage levels

maturity curve

quite valuable right out of school but they eventually become stale overtime; less and less increases in pay

pay increase guidelines

raises as budgetary line items

embedded controls

range minimums and maximums; max is an important cost control

range midpoints

reflect the pay policy line in relation to external competition

Reinforcement theory

rewards reinforce performance; timing of payouts is important; rewards must follow directly after behaviors to be reinforcing