HR Management 4020 Lesson 9

Which of the following is a non-exempt employee under the FLSA?

A lawyer in a large corporation A general manager in a manufacturing company A health aide in a hospital (THIS ONE) A middle level executive in a bank An accountant in a pharmaceutical company

Intrinsic rewards are rewards one gets from the employer, usually money, a promotion, or benefits.

FALSE

What is the Federal minimum wage?

$7.25

How many times are the base salaries of executives in the United States higher than those of low-level managers or operative personnel?

400 times

Which of the following best describes the point method?

Breaking down jobs based on identifiable criteria and the degree to which these criteria exist on the job.

Job description is the process whereby an organization systematically establishes its compensation program.

FALSE

Most organizations conduct their own compensation surveys rather than relying on outside information.

FALSE

Labor Department's three criteria for making the "administrative versus production" decision about which jobs are classified as exempt and which jobs are not classified as exempt.

First, does the job have a primary duty that involves managing the employer's general business operations? Second, is the job structured in a way that provides an employee with wide discretion in how to approach his or her work? Lastly, do employees holding this job exercise independent judgment?

In order for incentive pay to effectively motivate employees, plans must meet a number of requirements, described below.

First, performance goals and performance measures must be linked to behaviors and outcomes that directly contribute to the organization's overarching strategic goals. In order to attain a return on the investment made in incentive pay, performance-related behaviors identified through both workflow analysis and job analysis need to be identified, quantified, and rewarded. Second, performance standards and goals that determine incentive pay must be perceived by employees as both challenging and attainable. Third, organizations must provide employees with the resources they need to reach the goals and standards that determine incentive pay rewards. As we discussed earlier in the course, employee performance is a function of employee motivation, employee ability, and organizational support. Organizations that do not provide employees with the requisite information, training, and tools will retard any potential performance increase that incentive plans could provide in a more supportive context. Fourth, employees must value the rewards tied to their increased effort and performance. Bonuses and merit increases in pay must be large enough to significantly impact an employee's attitudes about their pay but not so large that the costs outweigh the expected short-term benefit or restrict the ability of incentive pay to motivate that same employee in the future. Fifth, employees must perceive that the incentive pay plan is fair. If employees believe that increasing their effort in relation to stated organizational goals that directly relate to their work will lead to desired outcomes, then the incentive plan will have achieved its goal of effectively incentivizing improved performance. If employees believe that the incentive pay system does not provide fair outcomes or is administered unfairly, then those employees will be unlikely to expend the desired level of effort, at which point the incentive pay plan will not positively impact employee performance. Finally, incentive pay plans must address the possibility that employees will focus to a greater extent on incentive-related goals while ignoring other goals not addressed by the incentive pay plan. These other goals, not addressed by the incentive plan, may also impact individual and organizational performance to differing degrees. In some instances, ignored goals or behaviors that are also related to performance may counteract any positive impact the incentive plan could have had, even if employee effort toward the rewarded goal increases.

pay level

Once the organization has determined what the relative pay should be in various job categories, HR managers must decide what the average pay level should be for specific jobs. Pay level decisions are generally made with regard to market forces. If there is a surplus of workers in the external labor force with the needed knowledge, skills, and abilities, then organizations will set pay levels below market value. When there is a shortage of workers in the external labor market with the desired knowledge, skills, and abilities, then organizations will set pay levels above market value.

fair and equitable

Organizations should continually strive for pay structure policies that employees perceive as being fair and equitable. When employees perceive that they are not being paid fairly in accordance with their effort or performance, they are more likely to experience decreased motivation, lower job satisfaction, and lower organizational commitment.

B.W. works for a tech manufacturer. He attends monthly meetings with managers and co-workers to evaluate labor-saving ideas. Last year, the group came up with a scrap salvage procedure that saved the company a million dollars. Each employee received $1000. What kind of compensation system is used?

Scanlon Plan

The Fair Labor Standards Act established laws outlining minimum wage, overtime pay, and maximum hour requirement for most U.S. workers.

TRUE

Three of the most typical dichotomies of rewards are: intrinsic versus extrinsic rewards, financial versus nonfinancial rewards, and performance-based versus membership-based rewards

TRUE

pay structure policy

is then determined by combining the decisions made concerning job structure and pay level. Pay structure policy is also shaped by a variety of other influences including legal constraints, market forces, organizational strategy, and organizational constraints.

market forces

and organizational strategy play a significant role in shaping pay structure policy, as well. Organizations must compete with other organizations within both product markets and labor markets. When competing with other organizations on quality, service, or price, labor costs can significantly impact an organization's profits. In order to maintain profitability while completing the work needed to deliver the company's product or service, labor costs must be continually scrutinized. While competing in product markets motivates organizations to keep labor costs low, competing for talent in labor markets motivates organizations to pay higher levels of pay.

sales commissions

are employee pay based on a percentage of sales the employee has made during a performance period. Salespeople differ in the proportion of their pay that is derived from commissions. For some salespeople, all of their compensation is based on sales commissions, while others may receive both a salary and commissions. In some organizations, salespeople receive only a regular salary.

Performance bonuses

are generally tied to employees' achieving a set performance goal during a predetermined timeframe. Once employees earn the performance bonus, they must then re-earn that bonus in a subsequent performance period.

stock options

are rights to buy a predetermined number of shares in the organization at a specified price.

team bonuses

are typically tied to a team's attaining a specific one-time goal related to output.

team awards

are usually associated with other non-output-related outcomes, such as cost control or completing a contract before its due date.

Group- or company-level incentive pay plans

include profit sharing, stock options, and enrollment in employee stock ownership plans (ESOPs). These types of incentive plans are intended to refocus employee efforts by helping employees think about their work and their organization as an owner or investor. When employees believe that their increased effort could positively impact overall company performance and profits, these plans can be effective.

job structure

includes information about different groupings or categories of jobs and how much the relative pay in those job groupings should be.

Merit Pay

involves increasing employee pay based on the degree to which an employee improves his or her performance on a specific performance measure.

compensable factors

characteristics of jobs that determine the value of that job including the required knowledge, skills, and abilities; educational and certification requirements; the complexity of the work; working conditions; and the level of responsibility.

The Fair Labor Standards Act covers which of these categories?

child labor

Sonia is a compensation analyst for a large government agency. She reviews grades that have been established by skills, knowledge, and abilities. What job evaluation method is Sonia using?

classification

profit sharing plans

employees receive a percentage of the organization's profits either on an annual or quarterly basis. In order for profit plans to have an impact on employee motivation and effort, organizations must ensure that the rewards are large enough to be salient and valued and that employees understand the goal of the program.

Which of the following is NOT an extrinsic source of employee motivation?

enjoying being part of a work team

International compensation packages, referred to as a balance sheet, contain all of the following categories EXCEPT

golden parachute

stock ownership

group-level incentive plans include stock option and employee stock ownership plans. The goal of stock ownership plans is to encourage employees to think and behave like owners of the organization.

minimum wage

is the lowest hourly wage an employer can pay an employee under federal, state, or local laws.

Gainsharing Pay

ncentives translate improvements in team productivity or goal attainment into a pay bonus that is equally distributed among team members. The key benefit of a gainsharing plan is that it frees management from determining which individual-level behaviors should be captured by performance measures and also allows the team to determine its own unique plan for attaining performance goals. In order for gainsharing to be effective, there must be management commitment, management support of team self-management, a cohesive and supportive organizational culture, employment security, employees who value working as part of a team, and employees with teamwork-related social skills.

piecework rates

of pay reward employees with a set wage based on the number of units the employee produces

incentive pay structures

pay designed to align employee behaviors with behaviors tied to both individual and organizational-level performance. Incentive pay is linked to predetermined behaviors or performance outcomes. It can be a very powerful tool when it has been designed and implemented carefully. According to a survey published by WorldatWork, Deloitte Consulting, and Vivient Consulting in October of 2013, the majority of publicly traded companies, privately held companies, nonprofit organizations, and governments offered incentive pay. Types of short-term incentive pay included in the survey include annual incentive plans, discretionary bonus plans, spot awards, profit-sharing plans, gain sharing plans, team/small-group incentives, retention bonuses, and project bonuses.

employee stock ownership

plans (ESOPs) are qualified, tax-deductible stock bonus plans in which the organization places shares of stock into a trust that will subsequently be distributed to employees enrolled in the plan.

standard hour

plans reward employees with extra pay when employees complete their work ahead of schedule

Kenyatta is the new compensation manager of a large manufacturing company. She is currently redesigning the pay structure. She wants to be able to break down jobs based on identifiable factors and the degree to which these criteria exist on the different jobs in her company. What job evaluation method should Kenyatta use?

point method

overtime pay

requirements do not apply to employees defined by the FLSA and the Department of Labor as exempt: typically "white-collar" workers (e.g., managers, outside salespeople, highly compensated employees, and professionals). Non exempt employees are employees are paid one-and-a-half times their normal hourly wage for every hour over forty they work within a work week.

prevailing wage

wage rates and benefits that are at least equal to the median level of pay within a specific region.