MGT. 4613 Compensation and Benefits Final Werling
In order to resolve many organizations from redefining non-traditional jobs due to the lack of data, human resources mangers may do one or all of the following:
Match the hybrid job to the component job which has the highest pay; Compute the weighted average of the component jobs; and/or Match the hybrid job to the dominant component job and then add additional pay grade to reflect the additional duties.
Cost Effectiveness of Benefits
- Employee Benefits are not taxable - Group-based benefits come at a lower cost (e.g., life, health, and legal insurance)
Employee Retirement Income Security Act of 1974 (ERISA)
- If the company has a pension plan covering its employees, an employee has a right to be admitted to the plan upon completing one year of service with the company or upon reaching his/her 21st birthday, whichever comes later.
What is non-compensable time that does not count towards worked included:
- absences, - holidays not worked, - meal periods that last 30 minutes or longer, break periods lasting longer than 20 minutes, traveling - (1) from home to a work site, and vice versa, - (2) on overnight trips, - time spent before, after or between regular working hours, - changing clothes for the employee's convenience, - jury duty -voting time.
The classifications represent relatively narrow categories of jobs based on?
- common characteristics - similar to the traditional compensable factors used in compensation
The new model factors may include:
- include previous experience - seniority - performance - marketability - criticality to the organization - additional education
The FLSA applies to employees and enterprises engaged in?
- interstate commerce; - producing goods for interstate commerce; or handling, selling, or otherwise working on goods or materials that have been moved in or produced for such commerce by any person.
What are compensable factors?
- knowledge, - skills and abilities necessary to perform the job, - activities and tasks, - training and education requirements - working conditions - responsibilities - other traditional compensable factors.
All employees covered under the FLSA must be paid ......
- minimum wage for all hours worked. - Compensable time that must be counted as hours
Salary Basis Test
- must be paid a pre-specified sum of at least $455 week - pay cannot be docked for off time (pay docking rule)
Savings Plans as a Benefit option
-401 (k) -403 (b) -IRA -Stock Options
Standard rating scales
-Appropriate -provides a scale rating on performance dimension -Less subjective; but rater's scale levels may very -Gives a numeric rating
Disadvantages of Flexibility as a Benefit Option
-Bad choices -Administrative costs -Adverse selection effect
Lump sum salary/bonus increases
-Bonuses separate incentive pay from base pay -the lump sum payment heightens the raise and allows management to clearly relate it to performance -Raises/bonuses are not "lost" or buried in weekly pay checks -Lump sum payments increases visibility of rewards -Heightens the Link between pay and performance
Pay Plan process Issues
-Communication is a major challenge -Participation in system design -Participation in system administration
Financing : Employee pays all
-Cost control -Added coverage
Retirement and Savings Plan payments
-Defined Benefits plan -Defined Contribution Plans -Individual Retirement Accounts (IRA's) -Employment Retirement Income Security Act (ERISA)
Stock Options as a Benefits option
-ESOP - Employee stock ownership plan -Used to finance organization
Midpoint differentials can be:
-Elastic -Inelastic -Options -Effects
Financing : Contributory
-Employee pays a portion of premiums -cost control
Motivation - pay - performance
-Expectancy theory -equity -reinforcement -content theories
BARS
-Good for pay for performance -Provides a measurement of desired employee behavior -Objective standards -Concrete behavior examples given -Numeric scale rating
Salary vs. Bonus
-Increasing base rewards -Base pay adjustment to performance influences such as the market -Bonus is preferable from strict incentive view-point -Lump sum salary/bonus increases
Pay for performance systems
-Individual plans -Group incentive plans (gain-sharing and profit sharing plans)
Effect of Rater Errors on Pay for Performance
-Leniency -Halo effect -Severity -Central Tendency -Contrast Effect
Adjective Checklist
-Marginally appropriate -May be subjective -Does not describe -Adjectives may or may not be concrete
Other Benefit options
-Medical Insurance -Long Term and Short term Disability Insurance -Life Insurance -Paid Time off (PTO) -Employee services -Employee Assistance Program (EAP) -Educational benefits -Child care/elder care -Severance Pay
critical incident
-Not good for merit type pay for performance -It deals with extremes in behavior -Very good or very bad -No standards for the majority of the performers between extremes -May work for bonus based pay
Government Impetus
-Played an important role in the growth of employee -Three employee benefits: - Workers' compensation (state) - Unemployment insurance (federal) - Social Security (federal) -other employee benefits affected by laws such as Employee Retirement Income Security Act (ERISA)
Who can participate in benefits options?
-Probationary period -Dependents -FT/PT -Retirees a.Creates liability -Legal requirements a.COBRA b.Discrimination laws c. .ERISA: Over 21, worked 1000 hours, employed for one year
Pay for Performance disadvantages:
-Reduced quality, related additional costs -Adverse affect on workers health, morale -Increased risk of accident -Wide differences in earnings create ill feelings - Cost of installation vs. savings -Restrict new technology -Risk of failure -Turnover in short run -Increased administration costs -May require change in philosophy
Advantages of Flexibility as a Benefit Option
-Satisfy needs of individual -Limit costs -Improve understanding
Frequency of Payout
-Some plans payout every hour -There can be separation of performance and reward so long as the reward is tied back to the performance through communication
Group Plans gain sharing
-The idea of sharing a part of returns (profits, gains has been employed for decade) -Emphasizes the importance of teamwork
Exact job Match depends on:
-The nature of the work being performed -The relationship of the hybrid job to other jobs in the organization -The marketability of the employees in the job.
IRA as a benefit option
-Up to $2000 or 100% of income -Reduced availability based on income An Individual Retirement Account (IRA) is a government sponsored, tax-deferred personal retirement plan. ... Taxes on Traditional IRA contributions and earnings are deferred until the account owner takes a distribution from the IRA. When money is withdrawn from a Traditional IRA it is taxed as regular income
Midpoint inelastic differentials:
-Upper level jobs -fewer pay grades
Base
-What is performance? -Performance standard
Legally required Benefits
-Workers' Compensation -Social Security -Unemployment Insurance -FMLA
What are issues that may occur with a individual pay-for-performance?
-anticipated complaints -low trust -failure to recognize other sources of motivation (intrinsic)(extrinsic) -Organization criteria -Worker Criteria
What are the issues of ranking?
-could be used along with another method -Not good for pay if used alone
What are the Problems with lump sum plans?
-employee "takes the money and runs" (Some firms make the front-end payment a loan to be paid back with interest) -Employee dissipates a front-end payment and cannot support himself -Lump sum plans presume the performance appraisal plan is already administered in an equitable fashion
Pay for performance advantages:
-increased productivity - Lower production costs -Increased earnings - less direct supervision needed - Encourages workers to reduce down time, increase effective use of equipment -Enables more accurate estimates of labor costs -Matches commonly held merit value allows us to attract highly motivated individuals -Reduced turnover in the long run
Unit of analysis
-individual, group, organization -Issues: Line of sight, control over performance
Midpoint options differentials:
-lower for lower level pay grades -Higher for upper level pay grades -A constant differential between each pay grade -A changing differential based on the jobs at various level of the organization
Midpoint elastic differentials :
-lower pay grades -more pay grades - lower differentials -compression
What are the disadvantages with an "Essay Format"?
-not good for performance decisions - too subjective, no defined objective behavior as standards -each appraiser may have his/her own standards
Type of performance measure
-performance appraisals and outcomes
What are the pay level strategies:
-position -movement -Types: lead - (1+inflation) lead/lag -(1+ (inflation/2)) lag -(1+0%)
Profit Sharing
-provides a share of the company profits to employees -Makes a portion of pay a variable cost
Evaluation formats can be divided into two general categories:
-ranking - rating
The credibility of the wage data depends on many factors such as the:
-survey process -age of the data -number and types of survey participants -the vendors reputation -the support information provided in the report
Behaviorally Anchored Rating Scale (BARS)
-the most common format -uses behavior as descriptors -firms hope to make evaluations less subjective.
Midpoint effects differentials;
1. Ability to motivate training, promotions 2. Cost control 3. Manage minor fluctuations in market conditions and/or changes in job duties.
Why should Data be collected through surveys?
1. Adjust Pay Level 2. Adjust Pay Mix 3. Adjust pay grade assignments 4. Pay-Related Personnel Projects 5. Estimate Competitors' Labor Costs
The Dept. of Justice also requires that surveys:
1. Be conducted by an independent party 2. Report data that includes at least 5 respondents 3. Not report data where a single organization represents over 20% of the sample. 4. Data at least three months old. 5. No future data or anticipated policy. 6. Summated data only.
Aging the Data:
1. Determine the implementation date for the revised pay system, 2. Estimate the wage inflation for the previous year, 3. Determine the effective date of the wage data,
Pensions (ERISA)
1. Employee Retirement Income Security Act - 1974 - See Exhibit 1 2. Requirements a. Funding b. Vesting 1. Fully after 5 years (cliff vesting) 2. 20% after 3 years, plus 20% to 7 years c. Eligibility d. Fiduciary 1. "Prudent man"
Equal Pay Act and Title VII
1. Equal treatment in all forms of compensation 2. Sex based actuarial tables illegal 3. Pension premiums must be equal (L.A. Dept. of Water v. Manhart) 4. Pension payments must be equal (Arizona Governing Board v. Norris) 5. Employers must provide equal benefit coverage to spouses
Defined Contribution/Benefit Plans
1. Portability 2. Defined benefit 3. Defined contribution 4. Contributory/non-contributory (e.g., 401k plan, employee stock ownership plan "ESOP",
Benchmark jobs should:
1. Reflect the vertical and horizontal mix of jobs in the organization, 2. Be stable, 3. Represent a central job in the job family, 4. Have market data available, 5. Be common in other organizations, and 6. Include jobs that are market sensitive.
Social Security
1. Retirement supplement, disability, survivor benefits 2. Federal program 3. 6.2% for Social Security 1.45% forMedicare 4. Payout
What are the qualifying events under COBRA? (
1. Termination (unless for misconduct) 2. Reduction of hours so there is no coverage under the Employer's plan. 3. Retirement 4. Employee's death, divorce, or separation. 5. Dependent children who no longer qualify because of age under the employer's plan must also be offered coverage. 6. Dependents when employee is eligible for Medicare benefits.
Worker criteria
1.) Close tie between pay --------> performance 2.) High valence for pay 3.) Ability to perform 4.) No conflict of interest 5.) Control 6.) Measurable peformance 7.) Employee wants
All pension plans usually have four common characteristics:
1.) Involves deferred payments to a former employee (or surviving spouse) for past services rendered 2.) Specify a normal retirement age, at which time benefits begin to accrue to the employee 3.) Specify a formula for calculating benefits 4.) Provide for integration with social security benefits.
Size of Merit pay
1.) Problem with "just meaningful difference (JMD)" 2.) Don't mask merit adjustment with other adjustment 3.) 3% is minimum for a "JMD" 4.) 3% Separation important between adjacent performers 5.) Top performer should be getting twice what a "merely adequate" performer gets.
What are the three gain sharing plans
1.) Scanlon 2.) Rucker Plan 3.) Improshare
What are the three methods of ranking employees?
1.) Straight ranking 2.) Alternation ranking 3.) Paired-comparison ranking
What are the disadvantages of Individual Pay-for-Performance?
1.) Uncertain success rate 2.) Misfocused effort 3.) Increased worker stress 4.) Competition between workers 5.) Increased grievances 6.) Too complex 7.) Ability to pay 8.) Fluctuations in pay
What are the Individual Pay-for-Performance determinants?
1.) ability 2.) selection and placement 3.) Training and Development 4.) Motivation - pay - performance
What are the two pay level policies?
1.) deals with the organization's desired position relative to the competition 2.)deals with the organization's response to wage inflation
Participation in system design in issue in pay process because...
1.) enhances commitment 2.) Enhances performance 3.) Employees can control what happens 4.) Employees are committed
What are the advantages of Individual Pay-for-Performance?
1.) provides tool to directly influence behavior and performance 2.) Matches commonly held value systems 3.) allows firm to attract entrepreneurial achievers
Communication is a major challenge/issue in pay plan process because...
1.) standards 2.) Pay-performance link 3.) Individual bonus levels must be public 4.) Clear accounting of increase/bonus essntial
Organization criteria
1.) trust 2.) understanding (kiss) 3.) Bias free performance appraisal 4.) Adequate dollars for performance 5.) Adequate base pay 6.) Clear communication 7.) Timely reward 8.) Apolitical 9.)Performance necessary
Factors in pay-for-performance plans
1.)Type of performance measure 2.) Unit of analysis 3.) Base 4.) Rate 5.) Time span 6.) Timing of pay out
Fair Labor Standards Act
1938 act which provided for a minimum wage and restricted shipments of goods produced with child labor
Individual Competitive Compa ratio:
: Individual pay/market average
defined benefit plan
A benefit option or package in which the employer agrees to give the specified benefit without regard to cost maximum. Opposite of defined contribution plan.
defined contribution plan
A benefit option or package in which the employer negotiates a dollar maximum payout. Any change in benefit costs over time reduces the amount of coverage unless new dollar limits are negotiated.
Balanced Score Card Approach
A corporate wide, overall performance measure typically incorporating financial results, process improvements, customer service, and innovation. A way to look at what contributes value in an organization.
Pension Plans
A form of deferred compensation
Workers Compensation
A form of insurance paid by the employer providing cash benefits to workers injured or disabled in the course of employment. 1. State control 2. Disability, survivor benefits, rehabilitation 3. No fault 4. Premium paid by employer based on experience rating
MBO (management by objectives)
A system of goal setting and implementation; it involves a cycle of discussion, review, and evaluation of objectives among top and middle-level managers, supervisors, and employees.
403(b) plan as a benefit option
A tax-deferred retirement plan for teachers, hospital workers, ministers, and some other public employees -Education and non-profit -Same as 401(k) except -----20% contribution ceiling ------Up to $9500 (indexed)
What are the two determinants to Job matching?
A. Compare the organization's job duties to those described in the survey. 1.Do not use job titles to determine job match. 2.Match to at least 75% of job. 3.Match to lowest level of required education. 4.Compare the organization's job duties to those described in the survey. B. Consider organizational size only in situation where the job responsibilities change as the organizations get larger.
What are the policies that organizations use to deal with employees whose pay is over the grade maximums?
A. Freeze wages until the structure catches the individual's pay. B. Give employees ½ of their expected increase. C. Provide a bonus equal to the expected increase.
Defining the relevant labor market
A. The occupation or skill required. B. The geographic distance the employees are willing to commute. C. Employers who compete for the same skills D. Employers who compete with the same products E. EEO Considerations
Why the growth in employee benefits?
A. Wage and Price Controls B. Unions C. Employer Impetus D. Cost Effectiveness of Benefits E. Government Impetus F. Administrative Decision Making
Age Discrimination in Employment Act
Act that prohibits discrimination in employment for persons age 40 and over except where age is a bona fide occupational qualification. 1. Illegal to force most employees to retire 2. Must receive same benefits
Surveys typically report both:
Actual wages and pay ranges
What formula do you use to correct the wage data?
Adjusted wage = Reported wage x (1+ (Inflation x (age of the data in months/12)))
Wages differ across geographical locations. Organizations should adjust national data to reflect the wage differentials in relevant labor market
Adjusting data for geographical location
Training and Development
All attempts to improve productivity by increasing an employee's ability to perform. Training focuses on short-term skills, whereas development focuses on long-term abilities. -General -Specific
Unions
An association of workers, formed to bargain for better working conditions and higher wages. (pattern pensions plans, supplementary unemployment compensation, extended vacation plans, and guaranteed annual wage plans)
Vesting
An employee has the right to a vested (non-cancelable) pension benefit. It is illegal for an employer to discharge an employee in order to avoid vesting. a. 100% after 5 years cliff vesting b. 3 to 7 years @ 20% per year
Credit Service under the ERISA of 1974
An employee has the right to credit for vested pension benefits if he/she works for the company 1,000 hours during the year.
Average Compa-ratio
Average pay/average midpoint (By group, dept, job, etc)
Average competitive compa ratio
Average pay/market average (By group, dept, job, etc)
Rucker Plan
Based on ration of value added (sales less material and sales cost) to total employee earnings.
Improshare (Gain sharing plans)
Based on standard hours going into production -requires reliable and stable industrial engineering standards -focuses almost exclusively on production unity
Audit "cost effectiveness" as a Benefit Option
Benefits $'s v. direct pay
Management by Objectives (MBO)
Both a planning and an appraisal tool that has many different variations across firms.
Plan Scanlon
Built on standard costs (accounting problems)
minimum wage
Covered nonexempt workers are entitled to a minimum wage of $7.25 per hour. The organization cannot reduce the employee's pay less than $7.25 for any reason including garnishments, clothing fees, etc.
What are the Coverage Periods for COBRA?
Employee's coverage must be continued for 18 months. Others who qualify must be continued for 36 months.
Creative Profession Exemption
Employee's primary duty is the performance of work requiring invention, imagination, originality or talent in a recognized field of artistic or creative endeavor: Examples of Professions include: -Musicians, composers, conductors, soloists -Essayists, novelists, short-story writers, play writers -Screen play writers who choose their own subjects -Writers responsible writing positions in advertising agencies -Acting -Painters, photographers, cartoonists
Financing : Self-funding
Employer bears risk rather than carrier
Employer Impetus
Employer initiated -Initiative can be traced to pragmatic concerns about employee satisfaction and productivity.
Financing : Non-Contributory
Employer pays all premiums
central tendency error
Error that occurs when an appraiser rates all employees within a narrow range, regardless of differences in actual performance. a) Performance appraisal falls in the middle of rating scale b) No differentiation between performers c) Top/poor performers do not see a link between effort and performance
Fudiciary Responsibility
Establishes the "prudent man" rule as the basic standard of fiduciary responsibility; prohibits various transactions between fiduciaries and parties in interest; prohibits investment of more than 10% of pension plan assets in the employer's securities.
Audit "Value" as a Benefit Option
Establishes variable spending accounts - Medical, child care, premiums - Pays in pre-tax dollars -Does not allow carryover of balances to subsequent years
Based on recent the Justice Department interpretation of wage survey practices and price fixing, organizations should conduct phone surveys. TRUE or FALSE
False
Market rates DO NOT for benchmark jobs within the classification, internal labor market factors, and other factors related to general job responsibilities, determine the appropriate pay grade for the classification. TRUE or FALSE
False, they do determine the appropriate pay grade for the classification
Surveys typically only report actual wages TRUE or FALSE
False, they report both actual wages and pay ranges
Flexibility Section 125 Spending Accounts
Flexible spending accounts - Establishes variable spending accounts - Medical, child care, premiums - Pays in pre-tax dollars - Does not allow carryover of balances to subsequent years
wage and price controls
Government regulations that aim at maintaining low inflation and low levels of unemployment. They frequently focus on "cost-push" inflation, limiting the size of pay raises and the rate of increases in prices charged for goods and services. Used for limited time periods only.
An employee's pay that is below the minimum of the pay grade is called a?
Green Circle rate
Health Insurance Portability and Accountability Act (HIPAA)
In general, HIPAA alleviates "job lock" by making employees' health insurance portable from one group plan to another, or from a group plan to an individual plan. -It does this by limiting the length of time insurers and group plans can exclude coverage for employees' preexisting conditions, and by requiring plans to credit employees' prior coverage, which employees prove by presenting certificates. HIPAA also expands access to group health insurance by creating special enrollment rights for employees and their dependents.
Pricing Hybrid Jobs
In many small organizations, employees perform a variety of jobs; the combination of which is not reflected in wage surveys
What does "experience rating" mean?
Lower percentages are charged to employers who have terminated fewer employees.
Maximum pay range Equation
Maximum = Minimum * range %
The average of all reported data.
Mean
The middle data point in a ranked set of data, the wage rate at which 50% of the reported data is above and below the amount.
Median
Minimum Pay range equation
Minimum = Midpoint/ (1 + range %)
Variable Pay
Modifies the traditional pay system by adding a flexible bonus component that can be used to respond to organization needs.
What is the problem of the standard rating scales?
Not anchored in specific employee behaviors.
Portability under ERISA of 1974
Permits an employee leaving a company to make a tax free transfer of the assets behind his vested pension benefits (if the employer agrees) or of his vested profit sharing or savings plan funds to an individual retirement account.
Administrative Exemption
Primary duty must be the performance of office work directly related to the management of the organization Must be able to exercise discretion Mid level managers
Child Labor Standards
Prohibits the employment of children in jobs that my be hazardous -A minimum wage of not less than $4.25 an hour is allowed for employees under 20 years of age during the employee's first 90 consecutive calendar days of employment. Employers are prohibited from displacing employees in order to hire youth employees at the youth minimum wage.
An employee's pay that is above the maximum of the pay grade is called a
Red Circle rate
Paired-comparison ranking
Simplifies the ranking process by forcing raters to make ranking judgements about discrete pairs of people
Essay format
Supervisors answer open-ended questions, in essay form, describing employee performance.
The systematic process of collecting and making judgments about the compensation paid by other employers.
Survey
D. Wage data from different sources should age to the same point in time. TRUE or FALSE
TRUE
The proper adjustment rate is wage inflation, not general inflation (CPI). TRUE or FALSE
TRUE
Halo effect error
Tendency to see one quality of a person and applying it to a person's total personality a) Grading goes up or down depending on the appraised item causing the Halo effect b)Employee focuses attention on particular item because the other items will be given a similar appraisal rate regardless of performance. c)The pay system becomes skewed to the one item d)Employer pays for performance he doesn't want and not paying for desired it performance
Compa Ratio
The analysis evaluates the individual compa ratio which is the employee's current and projected base pay as compared to the recommended pay grade midpoint, which represents our pay level policy
Computer Employee Exemption
The computer employee exemption applies to employees who are compensated either on a salary or fee basis; who are employed as computer systems analysts, computer programmers, software engineers, or other similarly skilled workers in the computer field; and who are engaged in the design, development, documentation, analysis, creation, testing, or modification of computer systems or programs.
learned professional exemption
The learned professional exemption applies to employees compensated on a salary or fee basis that perform work that is predominantly intellectual in character, who possess advanced knowledge in a field of science or learning, and whose advanced knowledge was acquired through a prolonged course of specialized intellectual instruction.
Consolidated Omnibus Budget Reconciliation Act (COBRA)
The purpose of the act is to provide for continued health care coverage to terminated and qualified beneficiaries. It prevents the immediate termination of employer sponsored group health insurance when, under the terms of the plan, the employee and dependents are terminated because of some events
The market rates for jobs are constantly changing due to inflation and the regularity of pay decisions. Therefore survey data must be adjusted to reflect the changes, especially in situations where wages are increasing at a significant rate. TRUE or False
True
The market rates for jobs are constantly changing due to inflation and the regularity of pay decisions. Therefore survey data must be adjusted to reflect the changes, especially in situations where wages are increasing at a significant rate. TRUE or FALSE
True
The pay level policy is the stated position of the organization's average wage to the average wage in the marketplace. TRUE or FALSE
True
What is HIPPA coverage?
Unlike COBRA, which exempts employers with fewer than 20 employees, HIPAA applies to all employers which serve as plan administrators of group health plans.
unemployement insurance
a federally mandated program to minimize the hardships of unemployment through payments to unemployed workers, help in finding new jobs, and incentives to stabilize employment 1. Insurance against temporary layoff 2. Up to 26 weeks (or more) 3. Coverage varies by state 4. State and Federal cooperation 5. Premium - % of first $7,000
401 (k) as a benefit option
a tax-deferred investment and savings plan that acts as a personal pension fund for employees -Tax deferred retirement plan -Maximum total deferrals - $15,000 (indexed)
ranking format
a type of performance appraisal format that requires that the rater compare employees against each other to determine the relative ordering of the group on some performance measure
MBO (Performance appraisal)
a) Moderate usefulness b) Provides both planning and appraising process c) Employees and supervisors set goals as standards d) Appraisal is measured against standards e) Numeric overall evaluation rating f) May be subjective in estimating goal difficulty and attainment
leniency error
a) Performance appraisal is greater than it should be b)Everyone receives increased pay c)Top performers are not motivated because they are not rewarded differently than other performers d)Poor performers are motivated to improve because they receive higher pay regardless of performance e)Misallocation of resources
The second labor market definition widens the market to include organizations of a similar size across related industries that would hire
an executive with specific skills
Executive Exemption
applies to executives who are compensated on a salary basis, who engage in management, who have authority to hire employees, and who regularly direct two or more employees
Employee Benefits
are that part of the total compensation package, other than pay for time worked, provided to employees in whole or in part by employer payments (e.g., life insurance, pension, worker's compensation, vacation)
Benchmark jobs are _____.
are used to develop the pay structure regardless of the system used to design the system.
In instances where there is limited market data the pay grades for the classifications are ...
assigned using pre-determined differentials based on differences in responsibility, education, and other factors.
Internet Survey Although it is difficult to evaluate the accuracy of the wage data without comparative data, compensation professionals analyze the survey characteristics to determine the...
credibility of the survey data
straight ranking
employees are ranked relative to each other
Contrast Effect
evaluation of a person's characteristics that is affected by comparisons with other people recently encountered who rank higher or lower on the same characteristics a) One person is compared and contrasted to another (set standard to judge others) b) Non-superstars not motivated to perform c) Internal equity may then be off (lower motivation for lower rated employee)
The traditional view of the relevant labor market limits the comparable organizations to those...
in the exact industry and assumes that individual skills are not transferable to organizations in related industries.
The new model provides greater increases in the early years of employment when the employee is rapidly gaining skills and contributing incrementally more to the organization and ....
lower increases in later years when the skills and contribution do not change as rapidly.
The bottom of the range reflects the typical hiring range while the grade maximum reflects...
maximum value of the job to the organization
Jobs are assigned to the pay grade where there is the closest match between the weighted average from the wage survey and the ...
midpoint of the pay grade
Mis-defining the relevant Labor market can result in ?
mis-allocation of resources, turnover, and higher than needed wages.
The profile base pay model combines ....
multiple job-related factors into a weighted equation to determine the appropriate pay within a competitive pay range
outside salesperson exemption
overtime wages need not be paid to a worker whose primary duty is to make sales or obtain orders or contracts and who is customarily and regularly engaged in work away from the employer's place of business
In the majority of the states, unemployment compensation paid out to eligible workers is financed exclusively by employers who.....
pay federal and state unemployment insurance tax.
A ratio of 1.00 indicates that the employee's base pay is at the...
pay grade midpoint
Pregnancy Discrimination Act of 1978
prohibits discrimination in employment against pregnant women 1. Defines pregnancy as a medical condition 2. Must receive same benefits as other medical conditions
Performance metrics
quantitative measures of job performance
Alternation ranking
recognizes that raters are better at ranking people at extreme ends of the distribution. Raters are asked to indicate the best and worst employee.
The third labor market definition considers for-profit organizations of similar size with positions performing similar job functions and duties that....
require executives with similar skill sets
Family and Medical Leave Act of 1993
requires employers to provide up to 12 weeks of unpaid leave for family and medical emergencies, with 50 or more employees.
Maturity curve model focuses mainly on....
retention of exceptional employees by matching the external market pay increases
The new model assumes that midpoint of the pay grade matches the market rate for a fully qualified employee, and that....
that the minimum of the pay range is the pay for a minimally qualified employee.
The midpoint separation between pay grades represents?
the average differential that the organization expects to maintain between jobs in adjoining pay grades.
The market based job evaluation process initially assigns benchmark jobs based on...
the market rates for the jobs
The pay range is the percentage differential from ?
the minimum to the maximum of the range
The complexity and degree of sophistication of the organization's profile based pay model depends on?
the specific needs of the organization and the ability to collect the required information.
severity error
the tendency to give all workers very negative performance appraisals a) Performance appraisal is lower than it should be b) Employees receives less pay for performance c) Top performers do not see a link between effort and performance d) Poor performers are not affected very much
Jobs are assigned to the pay grade where there is the closest match between
the weighted average from the wage survey and the midpoint of the pay grade
When admitted into the employee retirement plan, an employee gets up to _____________ years credit for any service with that company before he/she was ____________.
three; twenty-one
The maturity curve model (new model) rather than paying or a single factor such as seniority or performance, it attempts to ....
track the employee's skill development and contribution to the organization in order to establish the appropriate pay increase and target pay.
Youths 16 & 17 years old may perform any non-hazardous job for ______________.
unlimited hours
What does FLSA establish?
wage standards for minimum wage and overtime pay, equal pay, record-keeping, and child labor
When does variable pay work best?
when matched with a culture of employee involvement, emphasis on teamwork, and shared responsibility
Youths 14& 15 years old may work in non-manufacturing, non-mining, non-hazardous jobs under the following conditions:
• No more than 3 hours on a school day; • No more than 18 hours in a school week; • No more than 8 hours on a non- school day; • No more than 40 hours in a non- school week; and • Work may not begin before 7 a.m. nor end after 7 p.m., except from June 1 through Labor Day when evening hours are extended to 9 p.m.
Factors to consider when an organization manages the base compensation plan with one pay structure:
• Number of jobs • Types of jobs • Differences in relevant labor markets, including different locations.
What are the three possibilities when setting the minimum wage for the organization?
• The current Federal or state minimum wage, currently $7.25 as described in the Fair Labor Standards Act. • The reservation wage for the lowest paying job in the organization. • A social concern such as the "Living Wage".
