HR Chpt 11

When considering how to pay your employees, you can choose three levels of variable pay: individual, team, and organizational. Which of the following approaches is ideal when considering these three systems?

Have elements from every system contribute to the employee's pay.

A Pay Survey

If an organization wants to base its compensation system primarily on market pricing, which of the following tools or techniques would be the most relevant?

Piece-rate systems

In the context of individual incentives, time and motion studies are particularly important and informative when creating effective.Piece-rate system wages are determined by multiplying the number of units produced (e.g., garments sewn or service calls handled) by the piece rate for one unit

Who among the following individuals received a spot bonus?

a. Henry, a software engineer, who received a $500 gift certificate from his boss after he found a fix for a software bug that had been causing problems

The best ways to handle red-circled employees

freeze their pay until their salary range catches up to it or to give them a bonus that is not added into their base pay at the time other employees are receiving pay raises. It is not a good idea to cut an employee's salary to make it match their pay range, nor is it wise to increase an employee's salary without taking the pay range into account. See Section 11-6c: Individual Pay.

A manufacturing company starts an incentive plan in which all employees on a work team would receive a monthly bonus if they exceeded the monthly productivity targets. The bonus would be paid for by the revenue generated from the additional units produced. In this scenario, the manufacturing company is implementing a(n)

gainsharing plan

Free riding is a problem most likely to be associated with

gainsharing plans

Gainsharing Plans

gainsharing plans are team incentive plans

merit raise

given for good performance

Individual Variable Pay

given to reward the effort and performance of each employee. Common individual variable pay methods are piece-rate systems, sales commissions, and individual bonuses. Individual incentives may focus employees on what is best for them personally, which may lead to a competitive rather than cooperative environment.

Georgy, an employee at a telecommunications company, is in Pay Grade 3 and earns $14.50 an hour. The pay range for Grade 3 is $7 to $13 an hour. Georgy, therefore, is paid above the pay range set for his job. In the given scenario, Georgy is a _____

red-circled employee

Tangible direct rewards

tangible direct rewards refer to the cash payments that employees receive, such as wages, salaries and bonuses

External Equity

the external competitiveness of an organization's pay relative to pay elsewhere in its industry. If an employer's rewards are not viewed as equitable compared to other organizations, the employer is likely to experience higher turnover.

across the board increase

usually given as a percentage raise based on standard market or financial budgeting determinations.

Pay Compression

when the pay given to new hires is higher than the compensation provided to more senior employees. When salary compression and inversion occur, they often negatively impact employee job satisfaction and morale

Salary Inversion

when the pay given to new hires is higher than the compensation provided to more senior employees. When salary compression and inversion occur, they often negatively impact employee job satisfaction and morale

Market pricing

which uses market pay data to identify the relative value of jobs based on what other employers pay for similar jobs.

Indirect Rewards

All of these can be classified as indirect rewards—they are difficult to measure quantitatively, but they can still serve to motivate employees. Direct rewards can be quantitatively measured, while intangible rewards are even more amorphous, including things like challenging work and autonomy.

green-circled employee

An incumbent who is paid below the range set for a job is considered

Anecia is a nonexempt government employee who earns..........when she works overtime instead of traditional overtime pay. anecia likes the arrangement because it allows her to spend more time with her family

Comp Hours

cost-of-living adjustment (COLA)

In the context of pay increases, a(n)......is a pay increment whereby every employee's pay is increased to compensate for inflation and rising prices and is usually tied to some general economic measure. . Often, these adjustments are tied to changes in the consumer price index (CPI) or some other general economic measure.

intrinsic vs extrinsic motivation

Intangible rewards, such as having meaningful work or feeling valued and appreciated for one's work, can be powerful intrinsic motivators even though their value is difficult to calculate in precise dollar terms. Employee stock options, gainsharing plans, and medical insurance are extrinsic motivators.

Time and motion study

Involves identifying and measuring a worker's physical movements when performing tasks and then analyzing the results to determine whether some motions can be eliminated or performed more efficiently

When deciding on critical success factors for an organization, what should you do?

Keep the number of success factors you choose small (between three and five). When choosing critical success factors, it is important to choose a small number, typically between three and five. Critical success factors are the key influencers of organizational results, and people can only focus on a few of them at any one time. Success factors are often common across companies and industries—for example, almost every company wants to generate profitable revenues

Point factor method

Lily is the HR manager of a cleaning services company. She is in the process of evaluating and updating pay rates for various jobs in the company. She is using a job evaluation method that involves determining job dimensions common to a group of jobs in the company and assigning values to each of them for each job. Some of the job dimensions include the level of education and experience required for the job. In the given scenario, Lily is using the _____

In the United States, employee salaries are increasingly based on ......rather than internal job evaluation methods such as the point factor method.

Market pricing

The Fair Labor Standards Act (FLSA) provisions focus on

Minimum wage

Organizational variable pay

Organizational incentives reward people based on the performance results of the entire organization. These programs often share some of the financial gains made by the firm with employees through payments calculated as a percentage of the employee's base pay. The most prevalent forms of organization-wide incentives are profit sharing plans and employee stock plans

Ailiyah is using market pay data to estimate the value of the different jobs in her company. What are some of the disadvantages of this approach

Pay survey data may not be gathered in appropriate ways. Market conditions can cause wide variations in pay levels. Two problems with using market pay data are that the pay surveys used to gather information may not have been done properly and that market conditions can cause pay levels to vary widely. Advocates of market pricing see the fact that it doesn't take internal pay into account as an advantage, along with the fact that this system is truly "market linked."

What is the fundamental premise of expectancy theory?

People are motivated when they believe that the more effort they expend, the better they will do on the task, and that the better they do on the task, the more likely they are to get a reward, and that they want the reward they are going to get.

Compensatory time off (comp hours)

Public-sector nonexempt employees can earn compensatory time off in lieu of payment for extra time worked at the rate of one and a half times the number of hours over 40 that are worked in a week.

Kyung-soo, a manager, would like to increase the intrinsic motivation of her employees. Which of the following should she do to achieve her objective?

Redesign jobs to give employees more autonomy

Sabbatical

Refers to time off from job for rejuvenation and development.

The Lilly Ledbetter Fair Pay Act

The Fair Pay Act (2009) extended the statute of limitations for equal pay claims and essentially treats each paycheck as a new act of discrimination. Pay discrimination need not be intentional to be unlawful. Pay practices resulting in disparate impact are also actionable. Steps to reduce liability include conducting a periodic disparate impact analysis of compensation plans, properly documenting all compensation decisions, retaining complete pay records for an appropriate duration, and limiting discretion in pay decisions to higher levels in the organization

Point Factor Method

The most widely used job evaluation method, the point factor method, looks at compensable factors in a group of similar jobs and assigns weights, or points, to them

Organizational incentive plans

The options profit sharing systems and stock option plans are incorrect because profit sharing plans and employee stock option plans are organizational incentive plans

intagible rewards

The perceived value of intangible rewards can differ among employees, making the development and management of total rewards much more complex

FLSA (Fair Labor Standards Act)

The primary federal law affecting compensation. Focuses on the following major areas: minimum wage, overtime pay, and limits on the use of child labor.

Team Variable Pay

When an organization rewards an entire team for its performance, cooperation among the members may increase. The most common team incentives are team bonuses and gainsharing plans. Such programs often focus on quality improvement, cost reduction, safety, and other measurable results

When are companies most likely to find lump sum increases (LSI) useful

When employees are at the top of their pay ranges Lump sum increases (LSI) are particularly useful when employees are at the top of their pay grades, because they do not increase an employee's base salary. Employees may become dissatisfied with LSIs because they do not receive base pay increases, and that can affect their retirement plans and their benefits. LSIs are typically not used when the cost of living has increased or when employees are at the bottom of their pay ranges, as these situations require that companies increase the employee's base pay

Market pricing

When making compensation decisions, companies are increasingly emphasizing market pricing, which uses market pay data to identify the relative value of jobs based on what other employers pay for similar jobs.

Red-circled employee

an incumbent who is paid above the range set for the job.

Intangible rewards

are elements of compensation that cannot be as easily measured or quantified

Vinod works as a waiter at a restaurant in the state of Nebraska and is compensated based on a fixed hourly wage plus any tips he receives from customers. According to the Fair Labor Standards Act (FLSA), Vinod's minimum hourly wage

can be less than the federal minimum wage as long as the tips he earns bring him up to the equivalent of the minimum wage.

commissions and employee piece-rate systems

commissions and piece-rate systems are individual incentive plans that do not provide equity ownership.

Social Security Benefits

covered under the Social security act

Employee pension

covered under the employee retirement income security act of 1974

Occupational safety

covered under the occupational safety and hazard act

An advantage of ..... is that the they give employees an equity interest in their organization, which may motivate employees to be more productive and focused on organizational performance.

employee stock ownership plans

extrinsic rewards

external to an individual and include base pay, monetary incentives, bonuses and other measurable rewards.

golden parachutes

golden parachutes are typically a part of severance packages. Golden parachutes are lucrative severance packages inked into the contracts of top executives that compensate them when they are terminated. In addition to large bonuses and stock compensation, golden parachutes may include ongoing insurance and pension benefits

Internal Equity

he comparison of positions within your business to ensure fair pay. You must pay employees fairly compared to coworkers

Benefits

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

Ranking method and classification method and seniority based pay

internal job evaluation methods.

compensable factor

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

Ranking method

is a simple system that places jobs in order, from highest to lowest, by their value to the organization. This is a qualitative method in which the entire job is considered rather than individual components. The ranking method generally is more appropriate in a small organization that has relatively few jobs

Employee stock ownership plans (ESOPs)

ive employees significant equity ownership in their organizations. Employees in an ESOP share in the growth and profitability of their firm. Employee ownership may motivate employees to be more productive and focused on organizational performance.

Azure Inc., an information technology company, uses a quartile strategy and positions itself in the third quartile to develop its compensation strategy. It targets pay ranges so that 25 percent of other firms pay above it and the rest pay below it. In the context of compensation quartile strategies, Azure Inc. is most likely using the _____.

lead-the-market strategy

unpaid sick days and leave of absense

not a compensation for overtime

Garnishment

occurs when a creditor obtains a court order that directs an employer to set aside a portion of an employee's wages to pay a debt owed to the creditor. Distraint refers to the seizure of an individual's property to obtain payment of the money owed. Foreclosure is the process in which a lender attempts to recover the balance of a loan by selling the property that was used as collateral for the loan. Ejectment refers to the eviction of tenants from a property when they fail to pay the rent.

Classification method

often used in public-sector organizations. 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 subjective judgments are used to develop the class descriptions and to place jobs accurately in them

lump-sum increase

one-time payments that do not affect the base pay