Management 472 Test 2

Know what content-based means

The work performed in a job and how it gets done (tasks, behaviors, knowledge required, etc.) "this" in the Public sector... -Job Analysis -Licensure -Years Experiences -KSAOs -Some personality characteristics

Executive Perquisites (Perks)

"rank has its privileges." your organization to provide to people that the organization already owns, already has, and is already an expense to the organization but allocation of wealth, letting people access it becomes part of their compensation.

Benchmark Jobs - Administrative Group

Admin Assistant Principle Administrative Secr. Administrative Secr. Word Processor Clerk/Messenger

Have a basic understanding of how to determine whether a job should legally be paid hourly or salary

Common Examples that come up when trying to establish Pay -Authority (decision making, etc) -Responsibility (responsible for someone else's work) -PLOC (planning, leading, organizing and controlling THE WORK OF OTHERS) -Involves RISK of your own work AND SOMEONE ELSE'S

Pay-For-Performance Team Incentive Plans: Types

Comparing Group and Individual Incentive Plans Large Group Incentive Plans Gain-Sharing Plans Profit-Sharing Plans Earnings-at-Risk Plans Group Incentive Plans

Be able to explain Benchmarking

jobs that have stable job content, are common, and include sizable numbers of employees can be used to establish pay raises.

skill-based structures

link pay to the depth or breadth of the skills, abilities, and knowledge a person acquires that are relevant to the work.

Know what a market line and what this line explains/represents

links a company's benchmark jobs on the horizontal axis with market rates paid by competitors on the vertical axis. - Can be freehand or regression analysis.

Know what a Factor Evaluation System is

reflect the relative importance of each factor to the overall value of the job content for "this" comes from Job Analysis -scope -complexity -authority -responsibility -decision making use a quasi scientific approach job analysis, and then have perhaps focus groups or subject matter experts, sit down and to determine how much weight, each should be given, and how many points should be assigned.

Know what job-based means

relies on the work content —tasks, behaviors, responsibilities Systems that focus on jobs as the basic unit of analysis to determine the pay structure; hence, job analysis is required what those tasks, what those activities are worth to the organization, and that's what we're going to pay

long-term incentives and capital appreciation plans

stockholder dismay at the ease with which options are granted and exercised. the furor over stock options' tax advantages. in favor is linked to recent illegal backdating allegations

How is factor evaluation is performed

- Assign Points to Each Job - Determine External Pay Equity Different weights reflect differences in importance attached to each factor by the employer Weights are often determined through an advisory committee that allocates 100 percent of the value among the factors Measures that indicate the importance of each compensable factor in a job evaluation system. Weights can be derived through either a committee judgment or a statistical analysis

Know some problems that occur when using "soft measures", that is when using "human instrumentation" for performance measures to establish or adjust pay

-Measures used to value the work behavior and performances of others -Whether to increase or reduce pay -Reduction of pay have been made so companies can survive until things get better having people as the means of measuring like people assessing other people's job performance or rating people during structured oral interviews

Job Point

Applies to jobs from different job families Creates organizational flexibility Points assigned to skills Higher the number of points, the higher the core compensation level

Skill Block

Applies to jobs in same job family Employees expected to progress to increasingly complex jobs Skills may not build on each other Emphasizes horizontal & vertical skills

Benchmark Jobs - Manufacturing Group

Assembler I / Inspector I Packer Material Handler Inspector II Assembler II Drill Press Operator Rough Grinder Machinist I Coremaker

Health Care Benefits

COBRA (Consolidated Ominous Benefits Reconciliation Act '74) HIPPA (Health Insurance Portability and Accountability Act) Medical and dental prescriptions vision PPO (Preferred Provider Organization) HMO (Health Maintenance Organization) CDH plans Wellness programs Flexible Spending accounts

Goal setting

Challenging performance goals influence greater intensity and duration in employee performance. "These" serve as feedback standards to which employees can compare their performance. Individuals are motivated to the extent that goal achievement is combined with receiving valued rewards. Performance-based pay must be contingent upon achievement of important performance goals. Performance goals should be challenging and specific The amount of the incentive reward should match the goal difficulty. most motivating or when they're challenging but realistic, and then publicly stated

Know what broad bands are and how they differ pay range and why organizations might implement them

Collapsing a number of salary grades into a smaller number of broad grades with wide ranges. Usually "these" are accompanied by external market "reference rates" and "shadow ranges" that guide managers' decisions may be more about career management than pay decisions the control is in the salary budgets given to managers The manager has flexibility in pay decisions, as long as the total pay comes in under the budget give more range within specific jobs so people don't always have to load upwards to get more paid eventually contributing more of the organization, and also give more latitude to the supervisor in terms of determining what their employees get,

Be able to explain job-based pay

Compensates employees for current jobs Pay limits set for each job Evaluations based on job descriptions & objectives 2 main types - Merit pay - Incentive pay

Be able to explain employee-based pay

Compensates employees for flexibility Compensated for potential contributions Based on skills & knowledge Used for jobs not easily assessed For skills and knowledge

Know what skill-based means

Compensation approach that links pay to the - depth and/or breadth of the skills, - abilities, and - knowledge a person acquires or - demonstrates that are relevant to the work. Typically applies to operators, technicians, and office workers where the work is relatively specific and defined. The criterion chosen can influence employee behaviors by describing what is required to get higher pay

Know the basic types of pension plans including the advantages and disadvantages of each

Contributory plan Noncontributory plan Defined-benefit plan Defined-contribution plan IRA Roth IRA 401(k)

Know the different types of criterion problems

Criterion Deficiency Criterion Contamination Criterion Relevance Conceptual Criterion Operational Criterion

Retirement and Savings Plan Payments

Defined Benefit Plans Defined Contribution Plans Individual Retirement Accounts (IRAs) Employee Retirement Income Security Act (ERISA)

Be able to discuss the different components of compensation mix

Direct Pay: Base Pay & Wages Variable Pay Indirect Pay: Benefits

Be able to apply the motivational theories discussed in the text and class to adjusting the compensation mix

Equity Theory: Fairness Tournament Theory (and Pay Dispersion): Motivation and Performance Institutional Theory: Copy Others and Conform

Be able to explain the basics of Job Characteristics Theory

Equity Theory: Fairness Tournament Theory (and Pay Dispersion): Motivation and Performance Institutional Theory: Copy Others and Conform

Know the basic provisions of the Fair Labor Standards Act

FLSA has the "Federal Model" -In absence of State regulation this kicks in -Works in the benefit of the State -At a minimum you have to adhere to Fed Law

Family Benefits

FMLA provisions Adoption benefits and dependent-care assistance Domestic partner benefits

Medical and Medically Related Payments

General Health Care Health Care: Cost Control Strategies Short- and Long-Term Disability Dental Insurance Vision Care

Know the basic types of benefits (discussed with variable pay)

Government Mandated Benefits Retirement and Savings Plan Payments Medical and Medically Related Payments Miscellaneous Benefits Benefits for Contingent Workers

Know what comparable worth means and how this differs to the provision of the Equal Pay Act

Have 2 jobs of equal value to org in terms of what they produce, how they impact the org, and the revenues generated, but are conceptually different comparable other jobs comparable in value. if they're comparable in value to the organization, then they should be paid comparatively they should be paid roughly equal -2 jobs that are conceptually different, -but of EQUAL VALUE TO ORGANIZATION -From point factor evaluation system -Then they should be paid the same -Even if they are male/female dominated

Benchmark Jobs - Technical Group

Head/Chief Scientist Sr. Assoc Scientist Associate Scientist Scientist Technican

Know what the "Criterion Problem" is

Here's what we should be measuring the ideal or the conceptual criterion. And here's what we're actually measuring the problem is based on people's ability to observe

Know how to use a salary survey

Is the systematic process of collecting and making judgments about the compensation paid by other employers Translating an external pay policy into practice requires information on the external market. Surveys provide the data for translating that policy into pay levels, pay mix, and structures.

Stair Step Model

Jobs from same job family Jobs differ in complexity Higher the step, greater the skills Companies use separate models Models designed to match jobs

Pay-For-Performance: Group/Team Disadvantages

Line-of-sight may be lessened, that is employees may find it more difficult to see how their individual performance affects their incentive payouts. May lead to increased turnover among top individual performers who are discouraged because they must share with lesser contributors. Increases compensation risk to employees because of lower income stability. May influence some applicants to apply for jobs in firms where base pay is a larger compensation component.

Be able to explain the Lowest Cost Competitive Strategy

Lowers output costs per employee Training should improve productivity Improves product & service quality Long-term gains should outweigh short-term costs

Pay Policy: Lead Policy

Maximizes ability to attract and retain quality employees and minimizes employee dissatisfaction with pay If used only to hire new employees, may lead to dissatisfaction of current employees

Pay Policy: Lag Policy

May hinder a firm's ability to attract potential employees If pay level is lagged in return for promise of higher future returns - May increase employee commitment - Foster teamwork - May possibly increase productivity

Exceptions to the provision of the Equal Pay

Men have been there longer (Seniority) Something that can be quantified; Quantity/Quality of work Moving up in the ranks / Development Opportunities Hazardous Conditions

Pay-For-Performance Short Term

Merit Pay Merit Bonuses Aka Lump-Sum Bonuses Individual Spot Awards Individual Incentive Plans

Time-Off Benefits

Military Reserve Time off Election and Jury duty leaves Lunch and Rest breaks Holiday and Vacations Family leave Medical and Sick leave Paid time off Funeral and bereavement leave

Miscellaneous Benefits

Paid Time Off During Working Hours Payment for Time Not Worked Child Care Elder Care Domestic Partner Benefits Legal Insurance

Equity Theory: Fairness

People compare the ratio of their own outcomes to inputs with that of others that employees judge the fairness of their organization's internal pay structure by making multiple comparisons: -Comparing to jobs similar to their own (internal "this" ), -Comparing their job to others at the same employer (internal "this" ), -Comparing their jobs' pay against external pay levels (external "this" )

Know what criterion means in the context of pay-for-performance and why it can be challenging for some types of jobs

Performance criteria are measures used to determine successful and unsuccessful job performance. The Criterion Problem - How should we judge worker performance? Objective performance measures - quantitative indicators of work outcomes. Judgmental (subjective) performance - ratings/rankings made by some knowledgeable individual.

Pay-For-Performance: Group/Team Advantages

Positive impact on organization and individual performance of about 5 to 10 percent per year. Easier to develop performance measures than it is for individual plans. Signals that cooperation, both within and across groups, is a desired behavior. Teamwork meets with enthusiastic support from most employees. May increase participation of employees in decision-making process.

Be able to explain the role of Title VII of the Equal Rights Act on compensation

Prohibits discrimination in all employment practices on basis of race, sex, color, religion, or national origin

Know the provision of the Equal Pay

Provision of this act is that women are paid the same as men for the same job/work mandated by the "this" Act of 1963, and also by title seven of the Civil Rights Act, Women were paid less because "they were not the bread-winners of the family" of two people are doing the same job. They should get paid the same doesn't matter race, gender, age, or later doesn't matter if the person is disabled or not disabled focusing on the central function of the job, and you're not creating some kind of barrier to otherwise qualified person to either having a job or hurting themselves Summarizes: "this" Act, or Title VII, or Ledbetter Act says that if ppl are doing the same job, they should be paid the same

Variation

Quartiles and percentiles are a common measure. tells us how the rates are spread out in the market Standard deviation is probably the most common statistical measure of "this"

Central tendency

Reduces a large amount of data into a single number. mean - commonly understood (also called the "average") weighted mean gives equal weight to each individual employee's wage - captures size of supply and demand in market

knowledge-based structures

Removes entitlement label Connects pay to job-related abilities Increases employee autonomy Technological innovations Increased global competition

Be able to explain the Differentiation Competitive Strategy

Requires employees who are - Creative - Open - minded - Risk - takers Requires long - term focus Pay-for-knowledge effective with work teams

actions that may be taken to reduce these problems/errors

Reward supervisors who rate accurately Limit access to performance appraisal information Make managers aware of the benefits of accurate performance ratings and the detrimental affects of inaccurate performance ratings Redesign organizational systems that promote intentional distortion 360 degree performance appraisal

Be able to explain what core characteristics means

Skill variety - Requires using different abilities Task identity - Enables employees to do entire job Autonomy - Allows employees to choose Feedback - Provides clear communications

Retirement Benefits

Social Security Age Discrimination Employment Act (ADEA) Older Workers Benefit Protection Act (OWBPA) Early Retirement options Health care for Retirees Individual Retirement Accounts (IRAs) Employee Retirement Income Security Act (ERISA) Keogh Plans 401(k), 403(b), and 457 plans

Know the different views on job evaluation

Some believe job evaluations could be judged according to technical standards. Some say job content has hidden intrinsic value; others say the only fair measure is found in the external market Some say job evaluation practices are just and fair; others say they are just fair. compare each employee to each other employee, and then rank other employees

Know what Performance criteria are measures used to determine successful and unsuccessful job performance.

The Criterion Problem - How should we judge worker performance? Objective performance measures - quantitative indicators of work outcomes Judgmental (subjective) performance - ratings/rankings made by some knowledgeable individual. are and some considerations for designing and administering surveys

how/when you might use different components of compensation mix to optimally attract, retain or motivate employees

Total Rewards Monetary and non-monetary rewards provided to attract, motivate, and retain employees. Rewards System Objectives: Legal compliance with all laws and regulations Cost-effectiveness for the organization Internal, external, and individual equity Performance enhancement for the organization Performance recognition and talent management Enhanced recruitment, involvement, and retention

Benchmark Jobs - Managerial

Vice Presidents Div Gen Mgrs Managers Proj Leaders Supervisor

Government Mandated Benefits

Workers' Compensation Social Security Unemployment Insurance Family and Medical Leave Act (FMLA) Consolidated Omnibus Budget Reconciliation Act (COBRA) Health Insurance Portability and Accountability Act (HIPAA) ADEA and OWBPA provisions Military Reserve Time off Election and Jury leaves

Tournament Theory (and Pay Dispersion): Motivation and Performance

all players will play better in the first "this", where the prize differentials are larger. giving larger raises with a promotion increases effort and reduces absenteeism performance improves with larger differentials at the top levels of the structure. The "winner-take-all" idea springs from these studies

Know what labor unions are

an organization of workers that tries to improve working conditions, wages and benefits for its members Engage in Collective Bargaining - process in which "this" and company representatives meet to negotiate a new labor contract. - contract contains all the requirements of workers to the employer and the employer to the workers. - including salary, benefits, working conditions, work day/hours, conditions for hiring/firing, etc.

Halo error

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

Merit based pay

links increases in base pay (called "this kind of" increase) to how highly employees are rated on a performance evaluation

base salary

basic cash compensation that an employer pays for the work performed Tends to reflect the value of the work itself and ignore differences in individual contributions

and Labor Unions might influence compensation

big differences among people in pay. things more equitable they don't support pay-for-performance in that the org will push people to work harder and pay less seen as driving labor costs up easy to set wages working conditions, benefits bargain with one person rather than all the employees employees discuss issues with bargaining union v going directly to management

Pay-For-Performance: Group/Team

cause organizations to evolve into learning organizations. suggestions that help the organization break out of existing patterns of behavior and explore different ways of thinking and behaving

short-term (annual) incentives or bonuses

designed to motivate better short-term performance profit sharing can be quarterly or annually

Know what employee-focused benefits plans are and how these plans may benefit the organization and the employee

employees are allotted a fixed amount of money and permitted to spend that amount in the purchase of benefit options. this approach to benefit packaging is ideal. Employees directly identify the benefits of greatest value to them, constraining the dollars employees have to spend, benefit managers are able to control benefit costs this people will only use the benefits that they need or they will pick the benefits that they need instead of having a one size fits all works. Not everybody wants was being offered a one size fits all. the more complicated. You make things, the more choices you give people, it becomes more difficult to grasp or challenge to administer

Defined Benefit

employer agrees to provide a specific level of retirement pension, which is expressed as either a fixed dollar or a percentage-of-earnings amount that may vary (increase) with years of seniority in the company. calculate average earnings over the last 3 to 5 years of service offer a pension that is about one-half this amount (varying from 30% to 80% percent) adjusted for years of seniority Can calculate how much earned over time! Fixed

Defined Contribution

employer makes provisions for contributions to an account set up for each participating employee. Years later when employees retire, the pension is based on their contributions, employer contributions, and any gains (or losses) in stock investments - 401k - profit sharing - employee stock ownership plan KNOWN in, UNKNOWN out Growth oriented

Be able to discuss explain the basics of Linking Pay to Performance

have to come up with operational definitions of what that job performance is. operational definition that's something where everybody else can agree on the definitely that is a definition of performance and over above that, we can see we can count performance. operationally define performance

Frequency distribution

help visualize information and may highlight anomalies Unusual shapes may reflect problems with job matches, widely dispersed pay rates, or employers with widely divergent pay policies

Be able to discuss the components of executive pay and the purpose of each component

here & now: Base Salary future: profit-sharing and bonuses long-term: stock options (1) base salary, (2) short-term (annual) incentives or bonuses, (3) long-term incentives and capital appreciation plans, (4) employee benefits, and (5) perquisites

What Balancing Chaos and Control means

how much you're restricted for things to have some kind of value added return

Hertzberg two levels

hygiene factors motivator factors

Hygiene Factors (Herzberg)

maintenance, factors in their absence prevent behaviors, but in their presence cannot motivate performance. They are related to basic living needs, security, and fair treatment

Pay-For-Performance: Individual Incentive Plans

offer a promise of pay for some objective, preestablished level of performance. Pay constant function of production level Pay varies as function of production level

Be able to explain Internal Alignment and how achieved

often called internal equity refers to the pay relationships among different jobs/skills/competencies within a single organization Jobs and people's skills are compared in terms of their relative contributions to the organization's business objectives be able to communicate to the employees here was what how your specific salary for salaries for your job group were calculated internally

Employee Benefits

parts 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, workers' compensation, vacation) assorted clauses require that a particular benefit plan (1) cover a broad cross-section of employees (generally 80%), (2) provide definitely determinable benefits, and (3) meet specific vesting and nondiscrimination requirements. nondiscrimination requirement specifies that the average value of benefits for low-paid employees must be at least 75% of the average value of those for highly paid employees

Be able to discuss different types of pay-for-performance (individual level, group/team level, etc.) including the advantages and disadvantages or limitations of each

pay that varies with some measure of individual or organizational performance

Institutional Theory: Copy Others and Conform

predicts that very few firms are "first movers"; instead, they copy innovative practices after innovators have learned how to make the practices work. potential drawback of such mimetic behavior is that what aligns with the strategy of another organization may not align with the organization's own strategy. according to the resource-based view of the firm, it is not possible to out-perform one's competitors if you simply imitate their practices

Cross Departmental

promote staffing flexibility by training employees in one department with critical skills they would need to perform effectively in other departments - Employees develop skills usable in other departments - Helps manage sporadic, short-term staffing shortages - Helps meet seasonal fluctuations

Be able to explain what pay ranges are and how these ranges are created

range of pay rates from minimum to maximum set for a pay grade or class. It puts limits on the rates an employer will pay for a particular job. a lot of times are based on factor evaluation or some sometimes just on judgment call

Motivational Factors (Herzberg)

recognition, promotion, and achievement, motivate performance. Satisfiers

Know the basics of person-based pay structures

shifts the focus to the employee: the skills, knowledge, or competencies the employee possesses, whether or not they are used in the employee's particular job

Be able to explain the role of employee stock and stock options and why you need to put some limitations on how employees can use stock and stock options

the furor over stock options' tax advantages. companies increasingly have been pressured to expense "these" in their annual reports, showing stockholders the real cost Previously they received accounting treatment as if they were a free good. No more, say stockholders. A second factor is stockholder dismay at the ease with which "these" are granted and exercised. many executives in under-performing firms lined up for huge incentive payouts. public outcry and government intervention prevented this injustice.

Know some of the other types of benefits (such as time off) and have some ideas regarding how or when you might use these benefits

the option of trading overtime pay for time off. Rather than being paid overtime - the option of taking 2 or more hours off at another time. - more scheduling flexibility to attend to personal matters - appeal for employees who are also raising children and/or caring for elderly parents. - 81 percent of women prefer compensatory time off in lieu of overtime wages.

Be able to explain External Competitiveness and how established

the pay rates of an organizations jobs in relation to its competitors pay rates Setting a pay level Above, Below, or Equal to competitors, and Determining mix of pay forms relative to those of competitors Check O'Net Conduct external surveys

Be able to explain the basics of job evaluation including the types discussed in class

the process of systematically determining the relative worth of jobs to create a job structure for the organization. evaluation is based on a combination of job content, skills required, value to the organization, organizational culture, and the external market. systematically create structures to determine -how we're going to allocate things like pay or -how we're going to put together our total compensation

Recency effect

the tendency to give greater weight to recent performance and lesser weight to earlier performance.

Leniency

the tendency to give ratings that are overly high

Severity

the tendency to give ratings that are overly low

Attributional errors

the tendency to underestimate situational factors that may constrain the ratees performance.

Central Tendency Error

the tendency to use the midpoint of the scale too often Avoiding extremes in ratings across employees.

Be able to explain linking content with the external market

the value of job content is based on what it can command in the external market; it has no intrinsic value. Higher skill levels or working closely with customers commands higher wages. Skill level and nature of customer contacts become useful criteria for establishing differences among jobs.

Know the purposes of these surveys

to adjust the pay level relative to competitors - how much to pay? to set the mix of pay forms relative to competitors - what forms? to establish or price a pay structure - validate job evaluation results - establish internal structure to analyze pay-related problems to estimate the labor costs of competitors

Competency

translate each core competency into action related to organizational understanding, cost management, third-party relationships, and ability to identify business opportunities

Personal biases

unintentional discrimination based on age, sex, race, etc.

Rating Errors

unintentional rating inaccuracies. Leniency Severity Central Tendency Halo Attributional errors Personal biases Recency effect

Security Benefits

workers' compensation, unemployment compensation, severance pay supplemental unemployment benefits (SUBs)