Econ 448 final
What are the four major components of the balanced scorecard?
- customer -internal business processes -innovation and learning -financial
List the five types of legally required employee benefits.
- social security - unemployment insurance - workers compensation - family and medical leave - health care
What are names of the two types of differential piece-rate plans?
- taylor plan - merrick plan
An organization uses the Scanlon plan to provide incentives to its employees. The workers produce electrical components worth $6 million. The target ratio set by the organization is 20%. The employees will be given a bonus if the actual labor costs are less than _________ million.
1.2
The Rudd-Mitchell organization uses the Scanlon plan to provide incentives to its employees. The workers produce electrical components worth $5 million. The target ratio set by the organization is 30%. The employees will be given a bonus if the actual labor costs are less than ___________ million.
1.5
Equity Theory, Expectancy Theory, Goal Setting Theory, Reinforcement Theory, Agency Theory. Answer the following question: According to this theory, what important issue we need to consider when designing pay plans (list at least two)?
Equity Theory - tells you motivation is strongly motivated by the desire to be treated fairly - two monkeys theory, need to be treated fairly is really important to people, -should have clearly defined a performance-based pay structure, needs fairness and consistency. - increases in performance must be matched by commensurate increases in pay
Companies that conduct pay surveys should include at least 100 employers in the survey.
False
Generally labor-intensive industries tend to pay higher than technology-intensive industries.
False
Which of the following is TRUE about individual spot awards?
Larger companies may use formal mechanisms for giving the awards.
The reservation wage theory seeks to explain differences' in people's responses to job offers.
True
The theory of compensating wage differentials states that if a job has negative characteristics, employers must offer higher wages to attract and retain workers
True
Because employers are raising employee pay at various times during the year, survey data are usually updated using a process called [1] or [2] to forecast the competitive rates for the future date when the pay decision will be implemented.
aging, trending
A market pay line links a company's [1] on the horizontal axis with [2] on the vertical axis
benchmark jobs, markets rate
What is the major disadvantage of using broad banding for pay structures?
broadbands have such large pay ranges its up to the manager to set the level of compensation, so companies need to avoid inconsistencies and favoritism
"Central tendency" as a rating error refers to that a rater gives high ratings to all employees regardless of their performance.
false
Overtime pay is required only if the employer specifically asked or expected the employee to work more than 40 hours a week.
false
What is the major problem with ESOPs?
have little impact on productivity or profit, a significant risk for employees
Employers with a history of laying off a large share of their workforce generally pay _______ unemployment tax than those with few layoffs.
higher
What is the biggest disadvantage of using pure market pricing to determine pay structures in an organization?
ignore the unique business strategy that the organizations follow. Ignores the internal alignments and the relative value of different jobs. Ignores the link of internal pay structures with business strategie.
Generally, as you go up the organizational hierarchy, the minimum and maximum of pay grades for higher level jobs have _______ distance to the midpoint compared to those for lower level jobs.
larger
Which of the following is NOT a long-term incentive plan?
merit bonus plan
What is reservation wage theory? What does the theory seek to explain?
ob seekers have a reservation wage level below which they will not accept a job offer, no matter how attractive the other job attributes the theory seeks to explain differences in people responses to job offers
list three commonly used factors by managers to determine the relevant markets for pay comparison
occupation, geography and competitors
_____________________ is a type of incentive pay in which payments are a percentage of an organization's profits and do not become part of its employees' base salary.
profot-sharing plan
Give an example of a quoted-price market and an example of a bourse market.
quoted : stores that label each item's price or job ads that list a jobs openings starting wage (online shopping at forever 21) bourse: stores that allow haggling until an agreement is reached (ebay, priceline)
Among the four types of pay-mix strategies, which has the highest percentage of base salary
security (commitment)
Company W pays its employees based on the number of products that the employees produce. The employees earn a flat rate of compensation for each product they produce. This type of compensation plan is called _____________. (please write down the specific name for the compensation plan).
straight piecework rate. - employer pays the same rate per piece regardless of how many they make
In a pay grade, the minimum and the maximum of the pay range should be _________ to the midpoint.
symmetric
Explain what is Equal Employment Opportunity (EEO) and what is the major enforcement agency for EEO laws.
the condition in which all individuals have an equal chance for employment, regardless of their race, color,religion, sex, age, disability, or national origin Enforcement agency: EEOC - responsible for enforcing most of EEO laws - complaints must be filed within 180 days of incidence - EOC has 60 days to investigate complaint
What does external competitiveness refer to?
the pay relationships among organizations - the organizations pay relative to its competitors
A merit pay system links increases in base pay to employees' performance ratings.
true
According to the efficiency-wage theory, paying higher wages than competitors can bring higher profits because higher wages can attract higher ability workers and thus improve efficiency.
true
If federal and state minimum wage laws cover the same job, workers should be paid at or above the higher rate.
true
Implementing safety programs can help an organization reduce the costs of workers' compensation insurance.
true
The Merrick plan is a form of differential piece-rate plan and it establishes three piecework rates.
true
Among the four types of pay-mix strategies, which has the highest percentage of employee benefits
work/life balance
List TWO characteristics of the jobs that are grouped into one pay grade
- must be considered substantially equal for pay purposes ( similar job evaluation points, similar in relative contributions) - must have the same pay range
What types of benefits does Social Security provide? Please list FOUR.
- old age (retirement) insurance - survivors insurance - disability insurance - health insurance
which factors determine the relevant labor market that an employer chooses? three
- the same occupation or skills -employees within the same geographic area -the same products and services
Companies that use 360-degree performance evaluation should always link the evaluation results to pay raises or promotion decisions, in order to make the evaluation approach effective.
False
QVO Financial, an auditing firm, distributes a portion of the profits resulting from improvements in productivity and efficiency among its employees. If the company enjoys an improvement of $45,000, 60% of the improvement might be the company's share. The other 40% would be distributed among the employees in the company. Which incentive plan is being exemplified in this scenario?
Gain-sharing plan
Which of the following is an example of a quoted-price market?
Nile, a website that allows sellers to sell their products for a fixed price
Which of the following is NOT a benefit that is required by law in the US
Pension and retirement benefits
Among the four types of pay-mix strategies, which of the following has the highest percentage of base pay?
Security (commitment) strategy
Which of the following is a long-term incentive?
Stock option
Because employers are raising employee pay at various times during the year, survey data are usually updated using a process called aging or trending to forecast the competitive rates for the future date when the pay decision will be implemented.
True
Employers in highly competitive product markets are more able to increase pay levels of employees
True
In cases where the content of an organization's jobs does not sufficiently match that of the survey jobs, benchmark conversion can be used to quantify the differences of the job content.
True
A defined contribution retirement plan guarantees a specified or fixed level of retirement income.
false
According to the goal setting theory, relative pay is important as employees evaluate their pay-effort balance in comparison to other employees.
false
The Family and Medical Leave Act (FMLA) allows employees to take up to 12 weeks of paid leave after childbirth or adoption, to care for a seriously ill family member, or their own serious illness.
false
What does the Employment Cost Index (ECI, published by the Bureau of Labor Statistics) measure?
measures quarterly changes in employer costs for compensation
An incentive system in which an organization links pay increases to ratings on performance appraisals is referred to as ______________.
merit pay
What is the major disadvantage of using profit sharing plans?
most employees do not feel their jobs have a direct impact on profits, employees less capable of controlling profits harder for employees to see how their performance affects incentive payouts
Read the following scenario, determine if they are eligible for unemployment benefits and briefly explain why: John graduated in Dec. 2019, but he hasn't been able to get a job until now.
no because they have never begun a full-time job before
For an organization that emphasizes on individual achievement and motivating employees through promotions, when determining the range overlap across different pay grades, the organization should consider _____ range overlap.
smaller
Jeff owns and manages a small electronics repair store. He determines the time required by his employees to complete each task assigned by him. When employees complete the repairs in less time, they receive an amount of pay equal to that time determined by him. In this scenario, what pay for individual performance plan is Jeff is using?
standard hour plan.
A company that implements a gain sharing program determines that the target ratio of labor costs to the sales value of production is 20/100, or 20%. After a year, it turned out that he workers produced parts worth $1.2 million, and the actual labor costs were $210,000. If the gain sharing bonus will be split equally between the workers and the company, how much bonus will the workers get? Please briefly write down calculation procedure
1.2 million / 5 = 240,000 240,000 - 210,000 = 30,000 so 30,000 bonus would be split between workers
You own Falzer's Tool Coating Company, a high-tech firm specializing in the coating of cutting tools (e.g., drill bits, cutting blades) to provide longer life before re-sharpening is needed. You are concerned that the competition continues to develop new coating methods and new applications of coating in different industries. You want to create a work environment where employees offer more new product ideas, and suggest new industries where these ideas might be applied. What type of compensation plan will you recommend and why?
I believe that a long term incentive plan such as Broad-based option plans would be a good option because now that the employee has some part of the business, they are more invested in its success. If the employee had stock grants then they would offer ideas that expand the success and are more hardworking. BBOPs create a culture of ownership. ESOPs help encourages employees to participate more in the decision-making process because they have some interest in success.
Based on this module's lecture content, comment on the following statement regarding whether it's True or False, and briefly explain why: In order to make the 360-degree performance evaluation approach effective, the evaluation results should be always linked to pay raise or promotion decisions.
I believe this is false because in many cases 360-degree performance can be self-reported or reported by supervisors and subordinates. 360-degree evaluations are more for helping employees learn how to get ahead and do better, it's for developmental purposes. It's also only done every few years. There could also be rater errors.
What is the major disadvantage of a merit pay system?
Merit pay can be expensive
A firm uses a compensation plan to reward employees' performance based on an employee's performance rating and the employee's compa-ratio. Which of the following incentive plans is most likely exemplified in this scenario?
Merit pay plan
All U.S. employees, including federal, state, and local government employees, are covered under the Social Security program.
false
Horns error" as a rating error in performance appraisals refers to that a rater gives an employee high ratings on all aspects of performance because of his/her overall positive impression of the employee.
false
In order to receive benefits from workers' compensation, an employee who suffered work-related injury must show evidence that his/her employer was negligent of workplace safety.
false
Under a defined benefit retirement plan, employees are responsible for choosing specific investments.
false
Under the Equal Pay Act of 1963, all men and women who do the same work must be paid the same without any exceptions.
false
When designing pay for performance plans, most companies use a single performance measure linking to pay increases or bonuses.
false
A multi-national organization uses a gainsharing program in which employees receive a bonus if the ratio of labor costs to the sales value of production is below a set standard. This incentive plan is referred to as the _______________.
scanlon
Company A determines a particular time to complete a particular task. Even if an employee completes the allotted task before the standard time of completion, the employee receives an amount of pay equal to the wage for the designated time. Which of the following payment methods is exemplified in this scenario?
standard hour plan
Based on the video lectures and the article "Motivating Works - Ranked and Yanked" (which you can find in the folder of "Module 12 Supplemental Materials"), what are the major advantages and disadvantages of forced distribution approach in performance evaluation?
the reason its still needed - employers need to find ways to fairly evaluate employees and have a basis for compensation differences, needed when a wide gap between top performers and the rest. Ranking and yanking works when recruiting young staff and motivating them with the idea of being a partner. disadvantages - works poorly when the benefit disappears and turns into a cost if ranking is done repeatedly. If a large proportion of the workforce doubts the fairness, many will jump before pushed, turnover is higher than desirable. workers can inflate results to secure the bonuses.
An important implication of reinforcement theory is that the timing of payouts to employees is very important.
true
Comparing to Scanlon plans, Rucker plans tie incentives to more types of savings and can be more easily linked to individual incentive plans.
true
Employee self-evaluations are valuable for employee development purpose, but they should not be used for administrative decisions such as promotion or pay raises.
true
One advantage of gain-sharing plans compared to profit sharing plans is that employees under gain-sharing plans can see a stronger link between their efforts and payoffs that they will receive.
true
One important criticism to the broad-based option plans (BBOPs) is that rank-and-file employees may not necessarily see a connection between their actions and the company's stock price.
true
Under the Lilly Ledbetter Fair Pay Act, employers can be liable for current pay differences that are a result of discrimination occurred many years earlier.
true
Within an organization, the midpoints of pay grades usually fall exactly on the pay-policy line.
true
According to the Expectancy Theory, ______ refers to the value employees attach to the organization rewards offered for satisfactory job performance.
valence
Julianna, the HR manager at Hudson Corp., is facing criticism from the company's high-performing employees for the lack of an effective incentive scheme that rewards them with the necessary pay. The company has avoided paying out incentives in addition to employees' monthly salary in an attempt to minimize costs. But, after the last annual meeting, it has been decided to pay employees an incentive amount based on their performance ratings and their compa-ratio. In this scenario, which pay for individual performance plan is Julianna applying?
merit pay - this changes base pay based on how highly employees are rated on performance evaluations, rewarded every year. or merit bonuses, which are the same but not built into base pay, they are just bonuses
Read the following scenario, determine if they are eligible for unemployment benefits and briefly explain why: Tom got fired from the company because he violated workplace safety rules multiple times, and he is currently seeking to get employed.
no because you must be determined to be unemployed through no fault buy of your own
Is a company's pay-policy line always identical with the market pay line? Answer Yes or No and explain why.
no, market pay line is the average of market-level compensation and run a regression, pay policy line is developed by the specific measures that the company uses. policy line as percent of market line