BUS 434 EXAM 2
problem with benefits: for a standard worker annual avg benefits cost
$16,800-$27,695
(EMPLOYEE STOCK OWNERSHIP) ESOPS -problematic though as an incentive:
- effects are long term- can't predict very well what makes stock prices rise
COST CONTAINMENT: co-pay
- employee pays fixed or % amount for coverage
2 major components vital to success of gain sharing plans: PRODUCTIVITY NORM-
- requires effective measurement of base year data and acceptance by workers and management -choose a base year that isn't a "boom" or a "bust" year & one that is recent
WHICH APPRAISAL FORMAT IS BEST? IT DEPENDS ON THE TYPES OF TASKS BEING PERFORMED: highly routine, mechanistic tasks
- use behavioral expectations: -where it is possible to specify a single sequence of appropriate behaviors for accomplishing a goal -(can identify behavioral anchors)
(BROAD BASED OPTION PLANS) BPOS ex: STARBUCKS - "BEANSTOCK" plan: -all employees who work at least ________ are eligible
-500 hours/year
dimensions that describe good appraisal formats: validity criterion
-Does the method help reduce error and improve accuracy? -in reality, most do not do a great job with this
2 major components vital to success of gain sharing plans: EFFECTIVE WORKER COMMITTEES-
-Primary function is to evaluate employee suggestions for ways to improve productivity and/or cut costs
3 most common info to collect when designing the survey: base pay
-amount of cash competitors decided each job is worth
3 most common info to collect when designing the survey: total cash
-base + bonus (competitors use performance-based payments)
ISSUES STRESSED IN THE COURTS REGARDING PERFORMANCE APPRAISAL SYSTEMS: incorporate ______ _________ for evaluating performance wherever possible - written, objective
-clear criteria
(GETTING THE MOST OUT OF PAY SURVEYS) Look for survey vendors who stay in touch:
-communicate regularly, follow-up questions etc.
(ADJUST PAY STRUCTURE) -the job structure that results from the internal job eval may not match _______________
-competitors pay structure in the market
ISSUES STRESSED IN THE COURTS REGARDING PERFORMANCE APPRAISAL SYSTEMS: ________ treatment across raters
-consistent
(ADJUST PAY STRUCTURE) -May establish separate structure for
-different types of work
COST CONTAINMENT: benefit limitations: not uncommon to limit ______ income payments to some max % of income and to limit _______/______ coverage for specific procedures to max fixed amount
-disability -medical/dental
Bedeaux plan
-divides task into simpler actions/ time required for average skilled worker to complete action
dimensions that describe good appraisal formats: employee development criterion
-does the method communicate the goals and objectives of a firm?? -are the developmental needs of the employee identified/attended to? -employees respond better to feedback that tells them what went wrong on the task & how to improve
dimensions that describe good appraisal formats: personnel research criterion
-does the method lend itself to validating employment tests - can applicants predicted to perform well be monitored through performance evaluation -typically need quantitative permit statistical tests to confirm
(BROAD BASED OPTION PLANS) BPOS Stock grants:
-firms give employees shares of stock over a designated time period
WHICH APPRAISAL FORMAT IS BEST? IT DEPENDS ON THE TYPES OF TASKS BEING PERFORMED: less routine tasks
-focus on evaluating whether the final goal is met: MBO's
common errors (6)
-halo -horn -recency -central tendency -clone -spillover
frequency distribution:
-helps visualize data -unusual shapes can mean problems with job matches
dimensions that describe good appraisal formats: administrative criterion
-how easily can results be used for decisions like wage increases, promotions, transfers etc. -are comparisons among people possible? (need common denominator-usually a numerical rating of performance) -have to be able to say who did better for merit increases
(EMPLOYEE STOCK OWNERSHIP) ESOPS -goal:
-increase employee involvement in the firm
VALUE OF BENEFITS TO EMPLOYEES: communication of benefit package _____, _______ & ______________ is crucial
-info -design -administration
(ADJUST PAY STRUCTURE) -some firms go straight to market surveys to establish ______
-internal structures
dimensions that describe good appraisal formats: cost criterion
-is the method time-consuming or expensive for supervisors to use?
how to calculate base pay for non-benchmark jobs
-job Z is assigned 110 job evaluation points but no matching benchmark for the survey: using 8.16, see that job J has 100 points- matches survey job Eng 5, -base pay = $90,876, so for Job Z: 110/100 X $90,876 = $99,964
ISSUES STRESSED IN THE COURTS REGARDING PERFORMANCE APPRAISAL SYSTEMS: have adequately developed
-job descriptions
what is on the horizontal axis when constructing a market pay line
-links a firm's benchmark jobs (internal structure)
what is on the vertical axis when constructing a pay market line
-market rates paid by competitors (market survey)
(ADJUST PAY STRUCTURE) -Many firms use __________ _________ to validate their own job evaluation results
-market surveys
(PROFIT SHARING PLANS) -downside:
-most employees don't feel their jobs have a direct impact on profits
COST CONTAINMENT: probationary periods - excluding _____ employees from coverage until some term of employment is completed
-new
COST CONTAINMENT: increasingly, employees are auditing their benefit options for cost containment __________
-opportunities
(BROAD BASED OPTION PLANS) BPOS ex: STARBUCKS - "BEANSTOCK" plan: -meant to increase sense of _________ & ________
-ownership -retnetion
(EMPLOYEE STOCK OWNERSHIP) ESOPS why do firms do it? - esops foster employee willingness to ....
-participate in decision making & be more creative (hopefully)
(PROFIT SHARING PLANS) -productivity is higher in plans that:
-payout that year rather than deferred (i.e. pension program)
DESIGN THE SURVEY what info to collect-organizational data: -financial data: used to group firms by size, NOT gauge _______ to report pay levels by mix & size
-performance
(BROAD BASED OPTION PLANS) BPOS meant to emphasize __________ or inspire greater _______ & _______
-performance -commitment & retention
firms typically use several surveys. One as ________ and a _______ to check or validate results
-primary -couple
COST CONTAINMENT: administrative cost containment - controlling costs through policies such as seeking competitive bids for _________ _________
-program delivery
halsey 50-50 method
-shared split between worker & employer of any savings in direct cost -an allowed time for a task is determined by time study: savings from completion of task in less than standard time are divided 50/50
DESIGN THE SURVEY what info to collect-organizational data: -reflects the _____ & ____ among firms in the survey
-similarities and differences
low-high approach: when using skill competency-based structures- can't compare job based ones- mkt data converted to fit the _____ or _______
-skill -competency structure
(PROFIT SHARING PLANS) -work better for _____ firms
-smaller *less than 800 employees
ISSUES STRESSED IN THE COURTS REGARDING PERFORMANCE APPRAISAL SYSTEMS: require ________ to provide feedback about appraisal results
-supervisors
(GETTING THE MOST OUT OF PAY SURVEYS) Focus on specific business needs:
-survey should provide data on at least 75% of the positions you are pricing and represent firms that are specific labor market competitors
(EMPLOYEE STOCK OWNERSHIP) ESOPS why do firms do it? - research has found
-that employees willingness to participate in decision making and being more creative is NOT the case
3 most common info to collect when designing the survey: total compensation
-total cash + stock options/benefits
DESIGN THE SURVEY what info to collect-organizational data: -metrics or performance such as _______ & ______
-turnover -revenues
(GETTING THE MOST OUT OF PAY SURVEYS) stretch your salary budget:
-use free surveys, check job boards for salary info, talk to recruiters & participate in surveys
WHICH APPRAISAL FORMAT IS BEST? IT DEPENDS ON THE TYPES OF TASKS BEING PERFORMED: highly uncertain tasks with hard to specify goals
-use more subjective formats like standard rating scales -although, understand that this subjectivity is open to criticism
descriptive anchors used for standard rating scales
-uses adjective descriptors as anchors -("well above average to well below average) -MAJOR ISSUE: different raters have different definitions of scale levels (what does "above average" look like?)
descriptive anchors used for BARS
-uses behaviors as descriptive anchors by anchoring scales with concrete behaviors- try to make less subjective
low-high approach: identify lowest/highest paid benchmark jobs for relevant skills in relevant markets & use ____ from these jobs as anchors
-wages
ISSUES STRESSED IN THE COURTS REGARDING PERFORMANCE APPRAISAL SYSTEMS: give specific ________ instructions on how to complete the appraisal
-written
2 general categories for evaluation formats of performance appraisals
1) Ranking 2) Rating
3 administrative functions related to benefits
1) communication about the benefits program 2) processing claims 3) containing costs
5 dimensions that describe good appraisal formats
1) employee development criterion 2) administrative criterion 3) personnel research criterion 4) cost criterion 5) validity criterion
advantages of flexible benefit programs: (3)
1) employees choose package that best satisfies their needs 2) increased involvement improves understanding of the benefits 3) cost containment: firm sets dollar max, employee chooses w/in that constraint
disadvantages of flexible benefit programs: (3)
1) employees make bad choices & find themselves not covered for emergency 2) administrative burdens & expense increases 3) adverse selection: employees pick only benefits they will use, the subsequent high benefit utilization increases its cost
4 government mandated benefits
1) workers comp 2) unemployment 3) insurance 4) social security
3 most common info to collect when designing the survey
1. base pay 2. total cash 3. total compensation ** reflects total overall value of the work/employee
advantages of team incentive plans: (3)
1. can have positive impact on performance 2. signals that cooperation is a desired behavior 3. may increase participation of employees in decision making process
4 dimensions of a balanced scorecard approach
1. customer satisfaction 2. employee internal growth & commitment 3. operational efficiency in internal processes 4. financial measures
problems with merit pay: (3)
1. expensive 2. small impact on performance 3. lowers morale & performance if removed
Team incentives' team performance standards are based on: (4)
1. financial performance 2. production improvements 3. customer satisfaction 4. quality of goods/services
(GETTING THE MOST OUT OF PAY SURVEYS) antitrust issues- be sure the survey: (3)
1. is managed by a 3rd party 2. info is 3 months old 3. at least 5 participants report data for each survey question
disadvantages of team incentive plans: (2)
1. line of sight is lessened in terms of individual effort 2. may lead to increased turnover among top performers because they have to share with free riders
variation in different plans is based on 2 dimensions:
1. method of rate determination 2. relationship between production level & pay
3 salient features of pay grade:
1. midpoint 2. maximum 3. minimum
pay structure has 2 aspects that should be examined when interpreting the results of a market pay survey:
1. pay-policy line 2. pay ranges
2 major components vital to success of gain sharing plans:
1. productivity norm 2. effective worker committees
broadband advantages: (4)
1. provide flexibility to broadly define job responsibilities 2. support re-designed boundry-less firms w/ few managerial layers 3. foster cross-functional growth 4. employees move laterally w/in band to gain
internally: pay ranges allow managers to: (3)
1. recognize individual performance differences with pay 2. meet employees expectations that their pay will increase over time, even in the same job 3. encourage retention
purposes of conducting a market pay survey (5)
1. to adjust pay level (how much to pay) 2. adjust pay matrix (what forms) 3. adjust pay structure 4. study special situations 5. estimate competitors' labor costs
(STEPS FOR INTERPRETING DATA) (6)
1. verify data 2. look at minimums & maximums 3. statistical analysis 4. update survey data 5. construct a market pay line 6. setting pay for benchmark/ non-benchmark jobs
(BROAD BASED OPTION PLANS) BPOS ex: STARBUCKS - "BEANSTOCK" plan: -if performance goals are met, all employees receive equal stock grants worth ____ - ____ of their earnings
10-14 %
less than ______ % of employees are satisfied with their benefits
50
ADOPTING A COST-CENTERED APPROACH: determine cost commitments for current package, then budget dollars _____ already earmarked may be used for new benefits
NOT
criterion contamination
allowing non performance factors to affect performance scores
recency error
allowing performance at the end of the review period play too large a role for period
VALUE OF BENEFITS TO EMPLOYEES: key element in reward ____________
attractiveness
central tendency error
avoiding extremes in ratings across people
employees consistently rate ______ a key factor in satisfaction
benefits
VALUE OF BENEFITS TO EMPLOYEES: perceived value rises when there is ______ - flexible benefit package options
choice
2 general categories for evaluation formats of performance appraisals: Ranking
compare employees against each other on some performance measure
ROLE OF BENEFITS IN ATTRACTION/ RETENTION / MOTIVATION- RESEARCH SHOWS: absolute & relative comp costs- total package must be ____________ so when deciding to adopt a new option, must be considered in light of impact on total costs & relationship to what competitors do
competitive
ADOPTING A COST-CENTERED APPROACH: determine ______
compliance
spillover error
continue to downgrade employee for performance errors based on prior ratings
ADOPTING A COST-CENTERED APPROACH: if future cost containment is hard consider _____-___________ option with employees & communicate projected increases openly
cost-sharing
ADOPTING A COST-CENTERED APPROACH: consider employee preferences in relation to _________ / future costs
current
ROLE OF BENEFITS IN ATTRACTION/ RETENTION / MOTIVATION- RESEARCH SHOWS: pensions & med coverage actually _______ turnover
curtailed
Scanlon plan
designed to lower labor costs w/out lowering level of firm activity
variation:
distribution of rates around a measure of (central tendency)-tell us how the rates are spread out in the market
benchmark job approach: especially when purpose of the survey is to price the ______ pay structure. (all key functions and levels)
entire
ADOPTING A COST-CENTERED APPROACH: determine how benefits align to firm goals & _______ firm's offerings
external
2 general categories for evaluation formats of performance appraisals: Rating
generally more popular than ranking systems
clone error
give better ratings to someone like you
halo error
give favorable ratings across the board b/c of one positive dimension
horn error
give unfavorable ratings across the board b/c of one negative dimension
(OVERLAP) a= _______ degree of overlap: low midpoint differentials so small differences in the value of jobs of adjoining grades p.294
high
(GETTING THE MOST OUT OF PAY SURVEYS) avoid time consuming data input:
in terms of participation in the survey
(OVERLAP) b= _______ overlap so managers can reinforce a promotion into a new grade w. a larger pay increase, but fewer promotion opportunities p.294
less
benchmark jobs are chosen from as many levels as can be _______ w/ the descriptions of the benchmark jobs in the survey
matched
central tendency
mean & weighted mean (gives equal weight to each individual employee's wage)
problem with benefits: there is a __________ between cost to employer & perceived value to employee. cost is much higher than employee estimates
mismatch
(OVERLAP) a managerial job should be at least ____ grade higher than the job it supervises
one
ROLE OF BENEFITS IN ATTRACTION/ RETENTION / MOTIVATION- RESEARCH SHOWS: there is no strong data linking benefits level & _________
productivity
COST CONTAINMENT: negotiate lower fees by ________
providers
Rucker plan
ratio is calculated that expresses the value of production required for each dollar of total wage bill
ROLE OF BENEFITS IN ATTRACTION/ RETENTION / MOTIVATION- RESEARCH SHOWS: employees ranked benefits _________ only to job security in explaining job satisfaction
second
Rowan plan
similar to halsey- -both worker & employer share in savings, but workers bonus increases as the time required to complete the task decreases
(OVERLAP) some skill-based firms use no grades/ ranges but a _________ ____ ____ for each skill level regardless of performance or seniority
single flat rate *(corresponds to midpoint)*
(METHOD OF RATE DETERMINATION) based on: UNITS OF PRODUCTION PER TIME PERIOD-short cycle tasks:
standard is designated # of units to be produced in given time period
(METHOD OF RATE DETERMINATION) based on: TIME PERIOD PER UNIT OF PRODUCTION- longer cycle tasks:
standard is set in terms of time required to complete one unit of production
Gnatt Plan
standard is set purposely high so it requires great effort to complete - if worker fails, gets pre-established rate. if worker does it, earnings are 120% of time saved
Merrick plan
three piecework rates: 1) high for production exceeding 100% of standard 2) medium for production between 83-100% 3) low for production less than 83% of standard
benefits are part of the _____ compensation package provided to employees in whole or in part by employer payments
total (e.g. life insurance, pension, vacation & health insurance)
Taylor Plan
two piecework rates: 1) goes into effect when worker exceeds standard for given time period 2) when worker is below standard- rate is lower than regular wage
"aging data":
updating survey data: -forecast competitive dates when pay decisions will be implemented -amount to update: can use historical trends in the market, economic prospects & manager's judgement
descriptive anchors used for MBOs
uses outcomes
criterion deficiency
using an objective measure that doesn't truly represent key dimensions of the job
VALUE OF BENEFITS TO EMPLOYEES: ______ is key to employee valuing benefits
visibility
COST CONTAINMENT: develop programs that encourage
wellness
pay range
whenever 2+ rates are paid to employees in the same job: bachelors, masters & certifications