Chapter 11 HRM
What are the advantages and disadvantages of (1) a piecework pay plan, (2) a competency-based compensation plan, (3) team-based or group incentive plan, and (4) organization-wide incentive plans?
(1) a piecework pay plan -paid by quantity produced -advantage- who's doing good and who's not (Quantity) -Disadvantage- Could reduce quality of work, workers doing (2) a competency-based compensation plan -Skills, knowledge pay (3) team-based or group incentive plan (4) organization-wide incentive plans
What are the external factors that affect compensation? Explain the three pay strategies a company can adopt to compete against other companies.
- Geographic Differences: +If local supply of labor is less than the demand, wages will increase. +If local supply of labor is greater than the demand, wages will decrease. - Labor Supply: +Low unemployment requires employers to raise wages to tempt employees to leave their current employment and apply. +High unemployment rates allow employers to pay less due to a plentiful supply of workers. - Competition Employers can compete for workers by: +Match the competition by paying the market or going rate for labor. +Lead the competition by paying higher wages than competing employers. +Lag the market by paying slightly less than the prevailing levels in the marketplace. - Cost of Living +When the Consumer Price Index (CPI) increases, wages must also increase to allow workers to maintain their standard of living. +Cost of living varies according to location. - Collective Bargaining +Employers with unionized employee tend to pay higher wages. +Spillover effect may require non-union employers in the same area to raise wages. - Walsh - Healy Act Businesses with government contracts $10,000 and over must pay prevailing wage set by DOL. - Civil Rights Act Prohibits discrimination in pay on the basis of race, color, creed, age, or sex. - Equal Pay Act Requires men and women hired for the same job be paid the same. Salaries should be established on the basis of skill, responsibility, effort, and working conditions.
What is job evaluation? Explain three job evaluation methods. Explain a wage curve and a wage structure.
- Ordering method + A committee places jobs in a simple rank order from highest (worth highest pay) to lowest. - Classification method +Jobs placed in grades to compare their descriptions to the benchmarked jobs. Look for a common denominator (skills, knowledge, responsibility). - Point method +Jobs are rated and allocated points on several criteria. +Jobs with similar point totals are placed in similar pay grades. Offers the greatest stability. - Wage Curves +Drawn by plotting job evaluation data (such as job points or grades) against pay rates (actual or from survey data). *Indicates whether pay structure is logical. - Wage Structure +Designates pay ranges for jobs of similar value. Results in a logical hierarchy of wages, in overlapping ranges. Base Pay - Determined by job evaluation process. May be paid as: +Salary +Hourly wage +Piecework Premium Pay: +Overtime +Differential for hazardous, inconvenient or undesirable assignments or shifts. +On-call pay +Special skills Variable Pay: +Designed to focus performance on organizational objectives such as productivity and sales. +May be for individuals or groups.
What is the common method for compensating expatriates? What are the key components of this compensation package?
-Executive Perquisites or perks are offered to attract, retain, and motivate good managers and may include: +Paid life insurance +Club memberships +Company cars +Expense accounts +Interest-free loans +Consulting contracts +Free financial, legal and tax counseling, mortgage assistance, and so forth. +Golden parachutes provide financial windfall if a merger or hostile takeover occurs.
What motivates people at work? Explain and distinguish between intrinsic and extrinsic rewards, financial and nonfinancial rewards, performance-based and membership-based rewards. Explain the following terms: Piecework, commission, incentive plans, merit pay, and bonuses. Can people be motivated beyond reasons?
Rewards motivate people - intrinsic reward- Pride in one's work, Feelings of accomplishment, Being part of a work team, participation in decisions, autonomy, responsibility, meaningful work, and personal growth - extrinsic rewards- Money, Promotions, Bonuses, Benefits, recognition, preferred assignments, volunteer opportunities, casual dress, piecework, commission, incentive pay, bonuses, cost of living incentive, seniority raises, and profit sharing - financial reward- Wages, Bonuses, Profit sharing, Pension plans, Paid leaves, Purchase discounts - non-financial rewards- Make life on the job more attractive, Employees vary on the rewards they prefer. - performance-based reward- Commissions, Piecework pay plans, Incentive systems, Group bonuses, Merit pay - membership-based rewards- Cost-of-living increases, Benefits, Salary increases - Piecework- Paid based on unit of outputs that you produce in a day (factory job) - commission-Incentives for sales workers, May be combined with salary, Percentages vary with occupations and employers. - incentive plans- Any pay or rewards that motivate or provide incentives - merit pay- Reward for performance, Added to base pay, Can be difficult to create and administer for some occupations where results are hard to evaluate or compare. Teaching is a great example. - bonuses- Incentives for specific performance, Year-end bonuses are common, Spot bonuses are effective immediate rewards, beyond base pay, temporary Yes, irrational behavior or enjoyment, a lot of activity you do without reason
What are the key components of executive pay and compensation? Are executives in the US overpaid?
Salaries of Top Managers - Set by board of directors and designed to attract the best talent include: +Deferred bonuses are paid to encourage them to stay with the company. +Hiring bonuses paid for the deferred compensation lost when leaving their former company. +Stock options can serve as a performance-based incentive to improve profitability. Yes, Executives in U.S are overpaid
Describe the key components of the Fair Labor Standards Act (FLSA). Is that common that companies violate this law? What is the Equal Pay Act? Is that easy to enforce this law? Why?
The Fair Labor Standards Act (FSLA) requires: Minimum wage, Overtime pay, Record-keeping, Child labor restrictions According to FLSA: - Exempt employees + Include professional and managerial employees not covered under FSLA overtime provisions. - Nonexempt employees + Eligible for premium pay (time and one-half) when they work more than 40 hours in a week. + Minimum wage set at $7.25 in 2009. + Tipped employees may earn direct wages as low as $2.13 (higher in many states). + If tips and direct wage do not equal minimum wage, employer must make up the difference. Child Labor: - FLSA restricts hours and activities for workers under 18: - Under 14 may do limited work with parental consent. - 14 -15 year olds can work in some jobs outside of school hours for limited hours. - 16 - 17 year olds can work in non-hazardous jobs (no driving or power equipment) unlimited hours.
What is the most important thing that motivates you and makes you want to work really hard in your job? For you, what is the most interesting job in this world?
Working with great employees for the rewards received such as pay or feeling good about what I am doing. I think that being a stay at home mom would be the most interesting job in the world "Don't work hard work with your heart" When you work with your heart you are no longer working and it becomes easy and you are doing well No job is the most interesting job in the world