4220 Smith Exam 1

Trait systems

Type of performance-appraisal method, requiring raters (e.g., supervisors or customers) to evaluate each employee's traits or characteristics (e.g., quality of work and leadership).

Management by objectives (MBO)

a goal-oriented performance-appraisal method, requires that supervisors and employees determine objectives for employees to meet during the rating period, and then employees appraise how well they have achieved their objectives

occupation

a group of jobs, found at more than one company, in which a common set of tasks are performed or are related in terms of similar objectives, methodologies, materials, products, worker actions, or worker characteristics

Civil Rights Act of 1964

a major piece of federal legislation designed to protect

Team-based incentives

a small group of employees shares a financial reward when a specific objective is met

critical incident technique (CIT)

a specific kind of behavioral system, requires job incumbents and their supervisors to identify performance incidents - on the job behaviors and behavioral outcomes - that distinguish successful performance from unsuccessful performance; the supervisor then observes the employees and records their performance on these critical job aspects.

forced distribution

a specific kind of comparison performance appraisal system in which raters assign employees to groups that represent the entire range of performance

stairstep model

a type of pay-for-knowledge program, resembles a flight of stairs. The steps represent jobs from a job family that differ in terms of complexity. Skills at higher levels build upon previous lower-level skills

Comparison systems

a type of performance-appraisal method, require that raters evaluate a given employee's performance against other employees' performance attainments. employees are ranked from the best performer to the poorest performer

paired comparisons

a variation of simple ranking job evaluation plans, orders all jobs from lowest to highest based on comparing the worth of each job in all possible job pairs. Paired comparison also refers to a specific kind of comparison method for appraising job performance. Supervisors compare each employee to every other employee, identifying the better performer in each pair.

Fair Labor Standards Act of 1938 (FLSA)

addresses major abuses that intensified during the Great Depression and the transition from agricultural to industrial enterprises. These include substandard pay, excessive work hours, and the employment of children in oppressive working conditions. addresses: Minimum wage Overtime pay Child labor provisions

Pregnancy Discrimination Act of 1978 (PDA)

amendment to Title VII of the Civil Rights Act of 1964. The PDA prohibits disparate impact discrimination against pregnant women for all employment practices

Behaviorally anchored rating scales (BARS)

are a specific kind of behavioral system based on the critical incident technique (CIT). These scales are developed in the same fashion with on exception for the CIT, a critical incident would be written as "the incumbent completed the task in a timely fashion" For the BARS format, this incident would be written as, "The incumbent is expected to complete the task in a timely fashion"

Behavioral systems

are a type of performance appraisal method that requires raters to judge the extent to which employees display successful job performance behaviors

Signing bonuses

are monetary awards given to promote recruitment and job offer acceptance. These bonuses are particularly effective when coupled with a competitive wage or salary offer

legally required benefits

are protection programs that attempt to promote worker safety and health, maintain family income streams, and assist families in crisis. The key legally required benefits are mandated by the following laws: the social security act of 1935, various state workers compensation laws, the FMLA of 1993, and the patient protection and affordable care act of 2010

Human capital

as defined by economists, refers to sets of collective skills, knowledge, and abilities that employees can apply to create value for their employers

Management incentive plans

award bonuses to managers when they meet or exceed objectives based on sales, profit, production, or other measures for their division, department, or unit.

Internally consistent compensation systems

clearly define the relative value of each job among all jobs within a company This ordered set of jobs represents the job structure or hierarchy Companies rely on a simple, yet fundamental, principle for building internally consistent compensation systems: Employees in jobs that require greater qualifications, more responsibilities, and more complex job duties should be paid more than employees whose jobs require lesser qualifications, fewer responsibilities, and less-complex job duties

internally consistent compensation systems

clearly define the relative value of each job among all jobs within a company This ordered set of jobs represents the job structure or hierarchy. Companies rely on a simple, yet fundamental, principle for building internally consistent compensation systems: Jobs that require greater qualifications, more complex duties should be paid more highly than jobs that require lesser qualification

Job-based pay

compensates employees for jobs they currently perform\ include seniority pay, merit pay, and incentive pay

Portal-to-Portal Act of 1947

defines the term hours worked that appears in the FLSA

Stock options

describe an employee's right to purchase company stock.

Gainsharing

describes group incentive systems that provide participating employees with an incentive payment based on improved company performance for increased productivity, increased customer satisfaction, lower costs, or better safety records

differentiation strategies

develop products or services that are unique from those of their competitors can take many forms, including design or brand image, technology, features, customer service, and price

annual salary

employees earn salaries for performing their jobs, regardless of the actual number of hours worked throughout the year

Spot bonuses

employees receive small monetary gifts for outstanding work or effort during a reasonably short time period

local governments

enact and enforce laws that are most pertinent to smaller geographic regions

state government

enact and enforce laws that pertain exclusively to their respective regions Most noteworthy are differences in state minimum wage laws, which we will discuss shortly

National Labor Relations Act of 1935 (NLRA)

establishes employees' rights to bargain collectively with employers on such issues as wages, work hours, and working conditions

Davis-Bacon Act of 1931

establishes employment standards for construction contractors holding federal government contracts valued at more than $2,000 such contractors must pay laborers and mechanics at least the prevailing wage in their local area

cost leadership or lowest-cost strategy

focuses on gaining competitive advantage by being the lowest-cost producer of a product or service within the marketplace, while selling the product or service at a price advantage relative to the industry average

federal constitution

forms the basis for employment laws

Bias errors

happen when the rater evaluates the employee based on a personal negative or positive opinion of the employee rather than on the employee's actual performance

rating errors

in performance appraisals reflect differences between human judgment processes versus objective, accurate assessments uncolored by bias, prejudice, or other subjective, extraneous influences.

Extrinsic compensation

includes both monetary and nonmonetary rewards Compensation professionals are responsible for extrinsic compensation

360-degree performance appraisals

incorporate several sources of pertinent information to give a more complete less biased assessment of job performance. examples of pertinent source include supervisors, coworkers, and clients

Rucker plan

is a particular type of gain sharing program that emphasizes employee involvement Gain sharing awards are based on the ratio between value added (less the cost of materials, supplies, and services rendered) and the total cost of employment

Improshare

is a specific kind of gain sharing program that rewards employees based on a labor hour ratio formula a standard is determined by analyzing historical accounting data to find the number of labor hours needed to complete a product. productivity is then measured as a ratio of standard labor hours and actual labor hours

Scanlon plan

is a specific type of gain sharing program that emphasizes employee involvement. Gain sharing awards are based on the ratio between labor costs and sales value of production

collective bargaining agreement

is a written document that describes the terms of employment approved by management and employees during negotiations. It codifies the terms and conditions of employment regarding rates of pay and pay adjustments, and hours of work or other working conditions of employees

Incentive pay or variable pay

is defined as compensation, other than base wages or salaries, that fluctuates according to employees' attainment of some standard rewards employees for partially or completely attaining a predetermined work objective

compensable factors

job attributes that compensation professionals use to determine the value of jobs

Walsh-Healey Public Contracts Act of 1936

mandates that contractors with federal contracts meet guidelines regarding wages and hours, child labor, convict labor, and hazardous working conditions contractors must observe the minimum wage and overtime provisions of the FLSA In addition, this act prohibits the employment of individuals younger than 16 as well as convicted criminals Furthermore, this act prohibits contractors from exposing workers to any conditions that violate the Occupational Safety and Health Act of 1970

specialist

may be an HR executive, manager, or non-manager who is typically concerned with only one of the areas of compensation practice

generalist

may be an executive, performs tasks in a variety of HR-related areas. They are involved in several, or all, of the compensation functions such as building job structures, market competitive pay systems, and merit pay structures

base pay

money, for performing their jobs

illegal discriminatory bias

occurs when a supervisor rates members of his or her race, gender, nationality, or religion more favorably than members of other classes.

free-rider effect

occurs when employees of lower ability, skill, and effort benefit equally. as employees of higher ability, skill, and effort in group incentive plans this can lead to resentment and turnover of stronger contributors because weaker contributions are getting a "free ride"

federal government

oversees the entire United States and its territories. The clear majority of laws that influence compensation were established at the federal level

Occupational Safety and Health Act of 1970

passed to ensure safe and healthful working conditions for working men and women by authorizing enforcement of the standards under the act

Profit sharing plans

pay a portion of company profits to employees, separate from base pay, cost-of-living adjustments, or permanent merit pay increases. Two basic kinds of these plans are used widely today

current profit sharing

plans award cash to employees, typically on a quarterly or annual basis

deferred profit sharing

plans place cash awards in trust accounts for employees. These trusts are set aside on employees' behalf as a source of retirement income, and can also be considered a long-term incentive

Merit pay

programs assume that employees' compensation over time should be determined, at least in part, by differences in job performance as judged by supervisors or managers

Americans with Disabilities Act of 1990 (ADA)

prohibits discrimination against individuals with mental or physical disabilities within and outside employment settings, including public services and transportation, public accommodations, and employment

Pension programs

provide income to individuals throughout their retirement

job evaluation

recognize differences in the relative worth among a set of jobs and to establish pay differentials accordingly

Horizontal skills or knowledge

refer to similar skills; ex. assembly skills applied to lawn mowers and assembly skills applied to snow blowers.

nonexempt

refers to an employee's status regarding the overtime pay provision of the Fair Labor Standards Act of 1938 (FLSA). Administrative, professional, and executive employees are generally covered from the FLSA overtime and minimum wage provisions

exempt

refers to an employee's status regarding the overtime pay provision of the Fair Labor Standards Act of 1938 (FLSA). Administrative, professional, and executive employees are generally exempt from the FLSA overtime and minimum wage provisions

competency

refers to an individual's capability to orchestrate and apply combinations of knowledge and skills consistently over time to perform work successfully in the required work situations.

spillover effect

refers to nonunion companies' offer of similar compensation as offered by union companies to their employees the goal is to reduce the likelihood that nonunion workforces will seek union representation

Strategic compensation

refers to the design and implementation of compensation systems to reinforce the objectives of both HR strategies and competitive business strategies.

Capital

refers to the factors that enable companies to generate income, higher company stock prices, economic value, strong positive brand identity, and reputation

Depth of skills

refers to the level of specialization or expertise an employee brings to a job

similar-to-me effect

refers to the tendency on the part of raters to judge favorably employees whom they perceive as similar to themselves

Intrinsic compensation

reflects employees' psychological mind-sets that result from performing their jobs, for example, experiencing a great feeling from the belief that one's work matters in the lives of other

Market-competitive pay systems

represent companies' compensation policies that fit the imperatives of competitive advantage Compensation professionals build market-competitive compensation systems based on the results of compensation surveys.

Company stock shares

represent equity segments of equal value; equity interest increases with the number of stock shares held

Pay structures

represent pay rate differences for jobs of unequal worth and the framework for recognizing differences in employee contributions

Interindustry wage differentials

represent the pattern of pay and benefits associated with characteristics of industries Interindustry wage differentials can be attributed to many factors, including the industry's product market, the degree of capital intensity, the profitability of the industry, and unionization of the workforce

Compensation

represents both the intrinsic and extrinsic rewards employees receive for performing their jobs and for their membership as employees

Company stock

represents total equity of a company

Family and Medical Leave Act of 1993 (FMLA)

requires employers to provide up to 12 weeks of unpaid leave for family and medical emergencies

Title I

requires that employers provide reasonable accommodation. Reasonable accommodation for disabled employees may include such efforts as making existing facilities readily accessible, restructuring the job, and modifying work schedules

Group incentive programs

reward employees for their collective performance, rather than for each employee's individual performance

Merit pay programs

reward employees with permanent increases to base pay according to differences in job performance

Pay-for-knowledge

reward managerial, service, or professional workers for successfully learning specific curricula

Job analysis

s a systematic process for gathering, documenting, and analyzing information to describe jobs

Vertical skills

skills that are traditionally considered supervisory skills ex. scheduling, coordinating, training, and leading others

FairPay Rules

specify the criteria for distinguishing between work that is not exempt from the overtime pay provision of the FLSA

Human resource strategies

specify the use of multiple HR practices to reinforce competitive business strategy

longevity pay

systems reward employees with periodic additions to base pay according to employees' length of service in performing their jobs systems reward employees with periodic additions to base pay according to employees' length of service in performing their jobs

sales value of production (SVOP)

the sum of sales revenue plus the value of goods in inventory This is part of the equation to determine payout amounts in Scanlon gain sharing plans

labor hour ratio formula

used in determining the payouts in improshare plans, refers to a standard determined by analyzing historical accounting data to find the number of labor hours needed to complete a product; productivity is then measured as a ratio of standard labor hours and actual labor hours

Skill-based pay

used mostly for employees who do physical work, increases these workers' pay as they master new skills

severance pay

usually amounts to several months' pay following involuntary termination and, in some cases, continued coverage under the employer's medical insurance plan

discretionary benefits

Are benefits that employers offer at their own choice. These benefits fall into three broad categories: protection programs, pay for time not worked, and services.

Line employees

Are directly involved in producing companies' goods or service delivery. Assembler, production worker, and sales employees are examples of these jobs.

Protection programs

Are either legally required or discretionary employee benefits that provide family benefits, promote health, and guard against income loss caused by such catastrophic factors as unemployment, disability, or serious illness.

General Schedule (GS)

Classifies federal government jobs into 15 classifications (GS-1 through GS-15), based on such factors as skill, education, and experience levels. In addition, jobs that require high levels of specialized education (e.g., a physicist), significantly influence public policy (e.g., law judges), or require executive decision making are classified in three additional categories: Senior Level (SL), Scientific & Professional (SP) positions, and the Senior Executive Services (SES).

early retirement programs

Contain incentives designed to encourage highly paid employees with substantial seniority to retire earlier than they planned. These incentives expedite senior employees' retirement eligibility and increase retirement income. In addition, many companies include continuation of medical benefits. early retirement programs

core compensation

Describes the monetary rewards employees receive. Includes two forms of base pay: hourly pay (or wage) and salary. Also includes seniority pay, merit pay, incentive pay, cost-of-living adjustments (COLAs), and pay for knowledge.

hourly pay or wage

Earn hourly pay for each hour worked

Pay grades

Group jobs for pay policy application. Human resource professionals typically group jobs into these based on similar compensable factors and value.

referral plans

Individual incentive pay plans for rewarding the referral of new customers or recruiting successful job applicants

behavioral encouragement plans

Individual incentive pay plans that reward employees for specific such behavioral accomplishments as good attendance.

piecework plans

Individual incentive pay program, rewards employees based on their individual hourly production against an objective output standard, determined by the pace at which manufacturing equipment operates. For each hour, workers receive piecework incentives for every item produced over the designated production standard. Workers also receive a guaranteed hourly pay rate regardless of whether they meet the designated production standard. Some of these individual incentive pay program include a subjective criterion: Quality. This is based on the supervisors' interpretation and judgment.

Compensation surveys

Involve the collection and subsequent analysis of competitors' compensation data.

Brito v. Zia Company

Is a Supreme Court ruling, deemed that the Zia Company violated Title VII of the Civil Rights of 1964 when a disproportionate number of protected-class individuals were laid off on the basis of low-appraisal scores. Zia Company's action was a violation of Title VII because the use of the performance-appraisal system determining layoffs was indeed an employment test. In addition, the Court ruled that the Zia Company had not demonstrated that its performance appraisal instrument was valid.

errors of central tendency

Occur when raters (e.g., supervisors) judge all employees as average or close to average.

contrast errors

Occurs when a rater (e.g., a supervisor) compares an employee to other employees rather than to specific explicit performance standards.

negative halo effect

Occurs when a rater (e.g., a supervisor) generalizes employee's negative behavior on one aspect of the job to all aspects of the job; bias error

positive halo effect

Occurs when a rater (e.g., a supervisor) generalizes employee's positive behavior on one aspect of the job to all aspects of the job; bias error

first-impression effect

Occurs when a rater (e.g., a supervisor) makes an initial favorable or unfavorable judgment about an employee and then ignores or distorts the employee's actual performance based on this impression; bias error

leniency error

Occurs when an appraiser rates all employees high because they don't want to give low scores

strictness errors

Occurs when raters judge employee performance to be less than what it is when compared against objective criteria

job control unionism

Refers to a union's success in negotiating formal contracts with employees and establishing quasi-judicial grievance procedures to adjudicate disputes between union members and employers.

Competitive business strategy

Refers to the planned use of company resources - financial capital, equipment capital, and human capital - to promote and sustain competitive advantage

Services

Represent discretionary employee benefits that provide enhancements to employees and their families

Employee stock option plans

Represent one type of companywide incentives. Companies grant employees the right to purchase shares of company stock.

Cost-of-living adjustments (COLAs)

Represent periodic base pay increases that are founded on changes in prices as recorded by the Consumer Price Index (CPI) enables workers to maintain their purchasing power and standard of living by adjusting base pay for inflation

Pay ranges

Represent the span of possible pay rates for each pay grade. These include midpoint, minimum, and maximum pay rates. The minimum and maximum values denote the acceptable lower and upper bounds of pay for the jobs within particular pay grades.

paid time off

Represents discretionary employee benefits (e.g., vacation time) that provide employees time off with pay.

person-focused pay plans

Reward employees for acquiring job-related, knowledge, skills, or competencies rather than for demonstrating successful job performance rewards employees for the promise of performance in the future

human capital theory

States that employees' knowledge and skills generate productive capital known as human capital. Employees can develop knowledge and skills from formal education and/or on-the-job experiences.

Staff employees

Support the functions performed by line employees. Human resources and accounting are examples of these functions.

Seniority pay

Systems reward employees with permanent additions to base pay periodically, according to employees' length of service performing their jobs

value-added formula

The difference between the value of the sales price of a product and the value of materials purchased to make the product This part of the equation to determine payout amounts in Rucker gain sharing plans

skill blocks model

A kind of pay-for-knowledge program, applies to jobs from within the same job family. Just as in stair-step model, employees progress to increasingly complex jobs; however, skills do not necessarily build on each other in this program.

Cross-departmental models

A kind of pay-for-knowledge program, promote staffing flexibility by training employees in one department with some of the critical skills they would need to perform effectively in other departments