Compensation and Performance Final

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Distinguish policies on external competitiveness from policies on internal alignment. Why is external competitiveness so important?

It's the one thing that organizations use to attract and retain their workforce. It helps organizations look at pay relationships from other organizations

Describe how a benefits program might increase worker attraction, retention, and motivation.

attraction - benefit schedule are designed to favor long term employees retention - high benefits reduce turnover

Contrast ranking with standard performance appraisal or BARS.

ranking formats require the rater to compare employees against eachother to determine the relative ordering of the group on some performance measure bars - use behavior as descriptors, being much less subjective. when raters decided rating, the have a common definition for each performance level.

What are the four major components of expatriate compensation? Does culture really drive international compensation?

salary, taxes, housing allowances and premium no., because standards are mainly based of the expatriates home pay

The Equal Pay Act (EPA) of 1963 (which is part of the FLSA) forbids wage discrimination on the basis of gender if employees perform equal work in the same establishment. What are the four factors that can be used for pay differences?

seniority merit of quality of performance quality or quantity of production some factor other than sex

What is spillover? How does it lead to underestimation of the impact unions have on wages?

spillover is when employers seek to avoid unionization by offering workers the wages, benefits, and working condition won in rival unionized firms this lead to under estimation because nonunion org can enjoy nonunion interference and its employees can similar pay and benefits

4. What is a relevant market? (What three factors)

the same occupations or skills employees within the same geographic area the same products or services

How might union firms differ in wage and benefit levels, and how might they differ in wage structure?

union workers earn between 8.9-12.4 percent more than their nonunion counterparts. the size of the gap varies year to year. unions use a two tier wage structure, differentiating bay based upon date hired.

Give the five reasons for the historical growth in the size of benefits packages.

wage and price controls unions employer impetus cost effectiveness of benefits government impetus

What is the nature of government's role in compensation?

whether procedure for determine pay are fair safety nets for the unemployed and disadvantaged are sufficient employees are protected from exploitation

What are the major provisions of the Fair Labor Standards Act of 1938?

(1) to establish a minimum wage floor, (2) to encourage limits on the number of weekly hours by covered employees work through overtime provisions, and (3) to discourage oppressive use of child labor.

Give at least two examples of both individual and group based incentive plans.

Individual: bedeaux plan - provides variation on straight piecework and standard hour plans taylor plan - established two piece work rates Group: gain sharing plan - reward employee groups for measurable, non-financial achievements in pre-established areas. profit sharing - pay your employees a percentage of your company's overall profits.

Why are defined contribution pension plans gaining in popularity in the United States and defined benefit plans losing popularity?

defined benefits plans are becoming less popular bc there are issues with funding the pensions. contribution plans allow the employer to make provision for contributions for each employee. the pension is based on he employees contributions, employer any gains in stock investments. this also helps hunger employees who frequently change jobs

What is the balance sheet approach to paying expats?

employees on overseas assignments should have the same spending power as they would in their home country. the home country is standard for all payments. employees neither gain or lose financially

Explain expectancy theory, equity theory, and goal setting. How are they related to pay for performance?

expectancy theory - motivation is the product of three perceptions: expectancy, instrumentality, and valence performance based pay return must be large enough to be seen as rewards equity theory - employees are motivated when perceived outputs are equal to perceived inputs the pay performance link is critical; increases in performance must be maths by commensurate increase in pay goal setting - challenging performance goals influence greater intensity and duration in employee performance. performance based pay must be contingent upon achievement of important performance goals

Distinguish between global workers, expatriates, local nationals, and third-country nationals.

global workers - expatriates - employees temporarily working and living in foreign country local nationals - cities of a foreign country where the parent employer operates third country nationals - citizens of neither the employers parent country nor the foreign country where they are living and working

Contrast pay ranges and grades with bands. Why would you use either? Does their use assist or hinder the achievement of internal alignment? External competitiveness?

grades and ranges offers flexibility to deal with pressures from external markets and differences among organizations such as: differences in quality among individuals applying fir work, differences in the productivity or value of these quality variations, differences in the mix of pay form competitors use pay rages recognize individual performance, pay can increase over time, and encourage employees to stay with org. broad bands provide flexibility to define job responsibility, it supports redesign downsizing and boundary less org., and fosters cross functional growth

Name the four ways given in the book to improve performance appraisals.

improved appraisal formats select the right raters understand how raters process information training raters to rate more accurately

What pay level does the efficiency wage predict? Does the theory accurately predict organization behavior? Why or why not?

it predicts that above market wage /pay level will improve efficiency by attracting higher ability workers and by discouraging shirking bc of risk of losing high wage job not really bc, ---

Can you think of any companies that follow a lag and/or lead policy? Why do they believe it pays to pay differently?

lead pay level - attract and retain the best employees by using high pay to offset the dissatisfactions with the job lag pay level- paying below market rate, with promise of higher future returns. they believe that the competitiveness of pay will affect the organizations ability to achieve its compensation objectives and in turn affects its performance. pg 234

What factors determine the relevant market for a survey? Why is the definition of the relevant market so important?

occupation, geography and competitors bc if the market is incorrectly defined the estimates of competitors pay rates will be incorrect and the pay level and mix inappropriately established.

Explain what ERISA does.

protects the assets of millions of Americans so that funds placed in retirement plans during their working lives will be there when they retire.


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