HR 3200 Chapters 13,14,3
Reasonable accommodation
An employer's obligation to do something to enable an otherwise qualified person to perform a job. Companies should recognize needs based on individuals' religion or disabilities. Employers may need to make such accommodations as adjusting work schedules or dress codes, making the workplace more accessible, or restructuring jobs For example, accommodations for an employee's religion often involve decisions about what kinds of clothing to permit or require. LO5 Define sexual harassment, and tell how employers can eliminate or minimize it. religious belief requiring accommodation, the employee should demonstrate this need to the employer. Assuming that it would not present an undue hardship, employers are required to accommodate such religious practices. They may have to adjust schedules so that employees do not have to work on days when their religion forbids it, or they may have to alter dress or grooming requirements. For employees with disabilities, reasonable accommodations also vary according to the individuals' needs.
Standard hour plans
An incentive plan that pays workers extra for work done in less than a preset "standard time" Much like piecework plans, standard hour plans encourage employees to work as fast as they can, but not necessarily to care about quality or service.
Employee Benefits
Benefits contribute to attracting, retaining, and motivating employees. Variety of possible benefits helps employers tailor their compensation to kinds of employees they need. Employees have come to expect that benefits will help them maintain economic security. Benefits impose significant costs. As part of a the total compensation paid to employees, benefits serve functions similar to pay. Different employees look for different types of benefits. Employers need to examine their benefits package regularly to see whether they meet the needs of today. At the same time, benefits packages are more complex than pay structures, so benefits are harder for employees to understand and appreciate. Even if employers spend large sums on benefits, if employees do not understand how to use them or why they are valuable, the cost of the benefits will be largely wasted. Benefits packages are more complex than pay structures, making them harder for employees to understand and appreciate. The important role of benefits is one reason that benefits are subject to government regulation. Legally required benefits. Tax laws can make benefits favorable. Decisions about which benefits to offer should take into account: Organization's goals, objectives and budget Expectations of the organization's current employees and potential future recruits. An organization that does not offer expected benefits will have difficulty attracting and keeping employees. Although the government requires certain benefits, employers have a wide latitude in creating the total benefits package they offer employees. Employees have come to expect certain things from employers. If employees believe their employer feels no commitment to their welfare, they are less likely to feel committed to their employer.
Sales commissions
Commissions - incentive pay calculated as a percentage of sales. Some earn a commission in addition to a base salary. Straight commission plan - some earn only commissions. Some earn no commissions at all, but a straight salary. A variation on piece rates and bonuses is the payment of commissions, or pay calculated as a percentage of sales. Commission rates vary tremendously from one industry and company to another. Paying most or all of a salesperson's compensation in the form of salary frees the salesperson to focus on developing customer goodwill. Paying most or all of a salesperson's compensation in the form of commissions encourages the salesperson to focus on closing sales. In this way, differences in salespeople's compensation directly influence how they spend their time, how they treat customers, and how much the organization sells. The nature of salespeople's compensation also affects the kinds of people who will want to take and keep sales jobs with the organization.
Medical insurance cont
Consolidated Omnibus Budget Reconciliation Act (COBRA) of 1985 Federal law that requires employers to permit employees or their dependents to extend their health insurance coverage at group rates for up to 36 months following a qualifying event: Layoff Reduction in hours Employee's death Qualifying events include termination (except for gross misconduct), a reduction in hours that leads to loss of health insurance, and the employee's death (in which case the surviving spouse or dependent child would extend the coverage). To extend the coverage, the employee or the surviving spouse or dependent must pay for the insurance, but the payments are at the group rate. These employees and their families must have access to the same services as those who did not lose their health insurance. Six employer approaches to controlling health care benefits costs: Managed Care Health Maintenance Organizations (HMO) Preferred Provider Organizations (PPO) Flexible Spending Accounts Consumer-Driven Health Plans (CDHP) Employee Wellness Programs (EWP) Health insurance is a significant and fast-growing share of benefits costs at U.S. organizations. Employers have looked for ways to control the cost of health care coverage while keeping this valuable benefit. Although few employees fully appreciate what health insurance costs the employer, most value this benefit and look for it when they are contemplating a job offer. A recent survey by the Society for Human Resource Management found that 84 percent of employers were offering PPOs, but only 33 percent included HMOs as an option in their benefit plans.
Defined benefits plan
Defined benefit plan - pension plan that guarantees a specified level of retirement income. Employer sets up a pension fund to invest contributions. Such plans must meet funding requirements of Employee Retirement Income Security Act (ERISA) of 1974. Employer must contribute enough for the plan to cover all benefits to be paid out to retirees. Employers have a choice of using retirement plans that define the amount to be paid out after retirement or plans that define the amount the employer will invest each year.
Disparate treatment
Differing treatment of individuals based on the individuals' race, color, religion, sex, national origin, age, or disability status. For ex-ample, disparate treatment would include hiring or promoting one person over an equally qualified person because of the individual's race.
Pay for individual performance (all)
Earning money is not the only reason people try to do a good job. people also want interesting work, appreciation for their efforts, flexibility, and a sense of belonging to the work group and inner satisfaction of work well done. Therefore, a complete plan for motivating and compensating employees has many components, from pay to work design to developing managers so they can exercise positive leadership.
EWP
Employee Wellness Programs
Unpaid family and medical leave (Required by law)
Family and Medical Leave Act (FMLA) of 1993 Requires organizations with 50 or more employees to provide up to 12 weeks of unpaid leave: After childbirth or adoption To care for a seriously ill family member For an employee's own serious illness Employers must guarantee these employees same or comparable job when they return to work. In the United States, unpaid leave is required by law for certain family needs. Recent amendments signed into law expand the coverage for time off to care for an injured family member returning home from military combat. Employers need to keep track of leave requests to prevent abuse of the policy.
Social Security (Required by law)
Federal Old Age, Survivors, Disability and Health Insurance (OASDHI) program (Social Security)combines: Old age (retirement) insurance Survivor's insurance Disability insurance Hospital insurance (Medicare Part A) Supplementary medical insurance (Medicare Part B) In 1935 the federal Social Security Act established old-age insurance and unemployment insurance. Congress later amended the act to add survivor's insurance (1939), disability insurance (1956), hospital insurance (Medicare Part A, 1965), and supplementary medical insurance (Medicare Part B, 1965) for the elderly. Together, the law and its amendments created what is now the Old Age, Survivors, Disability, and Health Insurance (OASDHI) program, informally known as Social Security.
Unemployment Insurance (Required by law)
Federally mandated program administered by states to minimize unemployment hardships: Payments to unemployed workers. Help in finding new jobs. Incentives to stabilize employment. Most funding comes from federal and state taxes on employers. Along with OASDHI, the Social Security Act of 1935 established a program of unemployment insurance. Technically, the federal government left it to each state's discretion to establish an unemployment insurance program. At the same time, the Social Security Act created a tax incentive structure that quickly led every state to establish the program.
Medical (optional)
For the average person, the most important benefit by far is medical insurance. Although few employees fully appreciate what health insurance costs the employer, most value this benefit and look for it when they are contemplating a job offer 70% of all full-time employees in U.S. receive medical benefits Policies typically cover: Hospital expenses Surgical expenses Visits to physicians Additional coverage may include: Dental care Vision care Birthing centers Prescription drug programs Mental Health Parity Act (1996)
Workers compensation cont. (Required by law)
Four major categories of benefits: Disability income Medical care Death benefits Rehabilitative benefits About 9 out of 10 U.S. workers are covered by state workers' compensation laws; amount of benefits income varies among states. Generally it is two-thirds of the worker's earnings before the disability. Benefits are tax free. The cost of workers' compensation is borne by the employer. The states differ in terms of how they fund workers' compensation insurance. Some states have a single state fund. Most states allow employers to purchase coverage from private insurance companies. Most also permit self-funding by employers. Organizations can minimize the cost of this benefit by keeping workplaces safe and making employees and their managers conscious of safety issues. Cost of workers' compensation insurance depend on: Kinds of occupations involved State where company is located Employer's experience rating Unfavorable experience ratings lead to higher insurance premiums. Companies have therefore redoubled efforts to improve their experience ratings and control future costs for unemployment insurance. For example, helping laid-off workers find a new job can shorten the time in which they are receiving benefits. Some states allow shared work arrangements, in which companies reduce wages and hours, and employees receive partial unemployment benefits, rather than laying off workers. U.S. economic recession that began in 2008 put quite a strain on the country's unemployment insurance system. Although the economy seems to be on the rebound, unemployment levels have been slow to recede.
Gainsharing
Gainsharing - group incentive program that measures improvements in productivity and effectiveness and distributes a portion of each to employees. Organizations that want employees to focus on efficiency may adopt a gainsharing Knowing they can enjoy a financial benefit from helping the company be more productive, employees supposedly will look for ways to improve and work more efficiently. Addresses challenge of identifying appropriate performance measures for complex jobs. Frees employees to determine how to improve their own and their group's performance.
Vesting rights
Guarantee that when employees become participants in a pension plan and work a specified number of years, they will receive a pension at retirement age, regardless of whether they remained with the employer.
Piecework rates
Piecework rate, a wage based on the amount they produce. The amount paid per unit is set at a level that rewards employees for above-average production volume. An advantage of piece rates is the direct link between how much work the employee does and the amount the employee earns. It is easy to understand and seems fair to many people, if they think the production standard is reasonable Most jobs, including those of managers, have no physical output, so it is hard to develop an appropriate performance measure. It is most suited for very routine, standardized jobs with output that is easy to measure. a bonus based on number of faucets produced gives production workers no incentive to stop a manufacturing line to correct a quality-control problem. Production- oriented goals may do nothing to encourage employees to learn new skills or cooperate with others. For complex jobs or jobs with hard-to-measure outputs, piecework plans do not apply very well.
Pay for organizational performance - stock options (stock ownership)
Rights to buy a certain number of shares of stock at a specified price. Traditionally, stock options have been granted to executives.
Unemployment insurance (Required by law)
Size of unemployment tax imposed on each employer depends on the employer's experience rating: Number of employees a company has laid off in the past and cost of providing them with unemployment benefits. Careful HR planning can minimize layoffs and keep their experience rating favorable. Employers with a history of laying off a large share of their workforces pay higher taxes than those with fewer layoffs. Use of experience ratings gives employers some control over the cost of unemployment insurance. Careful HR planning can minimize layoffs and keep their experience rating favorable. Employers with a history of laying off a large share of their workforces pay higher taxes than those with few layoffs. In some states, an employer with very few layoffs may pay no state tax. In contrast, an employer with a poor experience rating could pay a tax as high as 5.4 to 15.4 percent, depending on the state. To receive benefits, workers must meet four conditions: They meet requirements demonstrating they had been employed. They are available for work. They are actively seeking work. They were not discharged for cause, did not quit voluntarily, and are not out of work because of a labor dispute. Workers who meet these conditions receive benefits at the level set by the state - typically about half the person's previous earnings - for a period of 26 weeks. All states have minimum and maximum weekly benefit levels.
Worker's compensation (Required by law)
State programs that provide benefits to workers who suffer work-related injuries or illnesses, or to their survivors. Operate under a principle of no-fault liability: Employee does not need to show that the employer was grossly negligent in order to receive compensation. Employer is protected from lawsuits. Prior to workers' compensation laws, employees who suffered work-related injury or illness had to bear the cost unless they won a lawsuit against their employer. Those who sued often lost the case because of the defenses available to employers. Employees are not eligible if their injuries are self-inflicted or if they result from intoxication or "willful disregard of safety rules.
Paid leave (Optional benefit)
Vacation Holidays Sick Leave Personal Days Floating Holidays Jury Duty Funerals Military Duty Time Off to Vote Paid Time Off (PTO) Bank Most flexible approach Employer pools pools personal days, sick days, and vacation days for employees to use as need arises Employers should also establish policies for leaves without pay - for example leaves of absence to pursue non-work goals or to meet family needs. Unpaid leave is an employee benefit because the employee usually retains seniority and other benefits during the leave. Paid holidays are time off on specified days in addition to vacation time. In Western Europe and the United States, employees typically have about 10 paid holidays each year, regardless of length of service. The most common paid holidays in the United States are New Year's Day, Memorial Day, Independence Day, Labor Day, Thanksgiving Day, and Christmas Day.
Stock ownership
While profit-sharing plans are intended to encourage employees to "think like owners," a stock ownership plan actually makes employees part owners of the organization. Like profit sharing, employee ownership is intended as a way to encourage employees to focus on the success of the organization as a whole. Some companies are trying to push eligibility for options further down the organization's structure.
Equal Employment Opportunity (EEO)
condition in which all individuals have an equal chance for employment, regardless of their race, color, religion, sex, age, disability, or national origin. Federal government's efforts in this area include: constitutional amendments legislation executive orders court decisions Among the most significant efforts to regulate human resource management are those aimed at achieving equal employment opportunity (EEO)
Sexual harassment
refers to unwelcome sexual advances, requests for sexual favors, and other verbal or physical contact of a sexual nature when: Submission to such conduct is made explicitly or implicitly a term of condition of an individual's employment, Submission to or rejection of such conduct by an individual is used as the basis for employment decisions affecting such individual, or Such conduct has the purpose of effect of unreasonably interfering with an individual's work performance or creating an intimidating, hostile, or offensive working environment. Sexual Harassment - Unwelcome sexual advances as defined by the EEOC. Based on Title VII's prohibition of sex discrimination, the EEOC defines sexual harassment of employees as unlawful employment discrimination. Under these guidelines, preventing sexual discrimination includes managing the workplace in a way that does not tolerate anybody's threatening or intimidating employees through sexual behavior. The most obvious examples of sexual harassment involve quid pro quo Harassment, meaning that a person makes a benefit (or punishment) contingent on an employee's submitting to (or rejecting) sexual advances. For example, a manager who promises a raise to an employee who will participate in sexual activities is engaging in quid pro quo harassment. A more subtle, and possibly more pervasive, form of sexual harassment is to create or permit a "hostile working environment." This occurs when someone's behavior in the workplace creates an environment in which it is difficult for someone of a particular sex to work.
Pay for organizational performance - Employee Stock Option Plans (stock ownership)
(ESOP) - an arrangement in which the organization distributes shares of stock to all its employees by placing it in a trust. Most common form of employee ownership. In an ESOP, the organization distributes shares of stock to its employees by placing the stock into a trust managed on the employees' behalf. Employees receive regular reports on the value of their stock, and when they leave the organization, they may sell the stock to the organization or (if it is a publicly traded company) on the open market. ESOPs are the most common form of employee ownership, with the number of employees in such plans increasing from approximately 250,000 in 1975 to more than 10 million active participants (those who are currently employed and earning benefits). The number of participants has grown even while the number of companies offering ESOPs has shrunk somewhat
Merit pay
A system of linking pay increases to ratings on a performance scale. They make use of a merit increase grid. Merit pay systems gives lowest paid best performers the biggest pay increases.
Retirement plans (optional)
About half of employees working in private business sector have employer-sponsored retirement plans. Contributory plan - retirement plan funded by contributions from employer and employee. Non-contributory plan - retirement plan funded entirely by employer contributions.
Affirmative action
An organization's active effort to find opportunities to hire or promote people in a particular group.
Balanced scorecard
Any form of incentive pay has advantages and disadvantages. Because of this, many organizations design a mix of pay programs. The aim is to balance the disadvantages of one type of incentive pay with the advantages of another type. Balanced scorecard - a combination of performance measures directed toward the company's long- and short-term goals and used as the basis for awarding incentive pay The balanced scorecard combine the advantages of different incentive-pay plans and helps employees understand the organization's goals. By communicating the balanced scorecard to employees, the organization shows employees information about what its goals are and what it expects employees to accomplish.
OSHA
Authorizes federal government to establish and enforce occupational safety and health standards for all places of employment engaging in interstate commerce. Established (OSHA). Responsible for: Inspecting employers Applying safety and health standards Levying fines for violation (OSH Act) of 1970 is the most comprehensive U.S. law regarding worker safety. Each employer has a general duty to furnish each employee a place of employment free from recognized hazards that cause or are likely to cause death or serious physical harm. Employers must keep records of work-related injuries and illnesses. Employers must post and annual summary of these records from February 1 to April 30 in the following year.
Bonuses
Bonuses for group performance tend to be for smaller work groups. These bonuses reward the members of a group for attaining a specific goal, usually measured in terms of physical output.
Selecting employee benefits
Decisions about which benefits to offer should take into account: Organization's goals, objectives and budget Expectations of the organization's current employees and potential future recruits. An organization that does not offer expected benefits will have difficulty attracting and keeping employees. Although the government requires certain benefits, employers have a wide latitude in creating the total benefits package they offer employees. Employees have come to expect certain things from employers. If employees believe their employer feels no commitment to their welfare, they are less likely to feel committed to their employer.
Defined contribution plan
Defined contribution plan - retirement plan in which the employer sets up an individual account for each employee and specifies the size of the investment into that account. Money purchase plans Profit-sharing and employee stock ownership plans Section 401(k) plans These plans free employers from risks that investments will not perform as well as expected. Responsibility for wise investing is with each employee.
OSHA Employee Rights
Employees have the right to: Request an inspection. Have a representative present at an inspection. Have dangerous substances identified. Be promptly informed about exposure to hazards and be given access to accurate records regarding exposure. Have employer violations posted at work site. OSH Act also grants specific rights to employees. Besides complying with OSHA regulations, employers often establish safety awareness programs designed to instill an emphasis on safety. They may identify and communicate hazards through the job hazard analysis technique or the technic of operations review. They may adapt communications and training to the needs of different employees, such as differences in experience levels or cultural differences from one country to another. Employers may also establish incentive programs to reward safe behavior. OSHA is responsible for inspecting businesses, applying safety and health standards, and levying fines for violations. OSHA regulations prohibit notifying employers of inspections in advance
Social security cont. (Required by law)
Employers and employees share Social Security cost through a payroll tax. The percentage is set by law. In 2012, employers paid a tax of 6.2% and employees paid 4.2 % on the first $110,100 of the employee's earnings. Of that, majority goes to OASDI, and 2.9 % of earnings goes to Medicare (Part A). For earnings above $110,100, only 2.9 % for Medicare is assessed, with half paid by employer and half paid by employee. Workers who meet eligibility requirements receive the retirement benefits according to their age and earnings history. Employers and employees share the cost of Social Security through a payroll tax. they can receive full benefits, or if they elect to begin receiving benefits at age 62, they receive benefits at a permanently reduced level. In 2012, the maximum benefit for a worker who retires at age 65 is more than $2,300, and it is above $3,200 for a worker who delays retirement until age 70. The full retirement age rises with birth year: a person born in 1940 reaches full retirement age at 65 years and 6 months, and a person born in 1960 or later reaches full retirement age at 67. The benefit amount rises with the person's past earnings, but the level goes up very little after a certain level.
Pay for group performance - group bonuses and awards
Employers may address the drawbacks of individual incentives by including group incentives in the organization's compensation plan. To win group incentives employees must cooperate and share knowledge so that the entire group can meet its performance targets.
Family friendly benefits
Family leave Child care benefits College savings plan Elder care
Flexible Spending account
Flexible Spending Accounts
Profit sharing plan
Get supervisors on board with the plan. Make sure employees understand how the plan works. Identify behaviors and results that contribute to greater profits. Make sure managers understand that they contribute to profit-sharing goals by encouraging their employees and keeping them focused on their goals. Consider linking rewards to the department's or division's performance, if profits can be assigned to the group. Make rewards big enough to matter. Time the profit-sharing payments for maximum effect.
Incentive Pay
Incentive pay - forms of pay linked to an employee's performance as an individual, group member, or organization member. Incentive pay is influential because the amount paid is linked to certain predefined behaviors or outcomes. For incentive pay to motivate employees to contribute to the organization's success, pay plans must be well designed. Along with wages and salaries, many organizations offer incentive pay - that is, pay specifically designed to energize, direct, or control employees' behavior.
Effective gainsharing
Management commitment Need for change or commitment to continuous improvement Management acceptance and encouragement of employee input High levels of cooperation and interaction Employment security Information sharing on productivity and costs. Goal setting. Commitment of all involved parties to the process of change and improvement. Performance standard and calculation that employees understand and consider fair and that is closely related to managerial objectives. Employees who value working in groups.
Group insurance (Optional benefit)
Medical Insurance Life Insurance Disability Insurance Long term care Insurance Rates for group insurance are typically lower than for individual policies. Also, insurance benefits are not subject to income tax, as wages and salaries are. When employees receive insurance as a benefit, rather than higher pay so they can buy their own insurance, employees can get more for their money. Because of this, most employees value group insurance. The most common types of insurance offered as employee benefits are medical, life, and disability insurance.
Individual bonuses
Performance bonuses are not rolled into base pay. The employee must re-earn them during each performance period. Sometimes the bonus is a one-time reward. Bonuses may also be linked to objective performance measures, rather than subjective ratings. Bonuses for individual performance can be extremely effective and give the organization great flexibility in deciding what kinds of behavior to reward. organizations also may motivate employees with one-time bonuses. When one organization acquires another, it usually wants to retain certain valuable employees in the organization it is buying, so organizations involved in an acquisition may pay retention bonuses —one-time incentives paid in exchange for remaining with the company—to top managers, engineers, top-performing salespeople, and information technology specialists.
Effective incentive pay plan
Performance measures are linked to the organization's goals. Employees believe they can meet performance standards. Organization gives employees the resources they need to meet their goals. Employees value the rewards given. Employees believe the reward system is fair. Pay plan takes into account that employees may ignore any goals that are not rewarded.
PPO
Preferred Provider Organizations (PPO)
Pay for organizational performance - profit sharing
Profit sharing - incentive pay in which payments are a percentage of the organization's profits and do not become part of the employees' base salary. Profit sharing may encourage employees to think like owners. Evidence is not clear whether profit sharing helps organizations perform better. Given the limitations of profit sharing plans, one strategy is to use them as a component of a pay system that includes other kinds of pay more directly linked to individual behavior. This increases employees' commitment to organizational goals while addressing concerns about fairness.
Disability Insurance (optional)
Short term: Insurance that pays a percentage of a disabled employee's salary as benefits to employee for six months or less. Long term: Insurance that pays a percentage of a disabled employee's salary after an initial period and potentially for rest of employee's life. Employees risk losing their incomes if a disability makes them unable to work. Disability insurance provides protection against this loss of income. Disability payments are a percentage of the employee's salary—typically 50 to 70 percent. Social Security includes some long-term disability benefits. To manage benefits costs, the employer should ensure that the disability insurance is coordinated with Social Security and any other programs that help workers who become disabled.
Team awards
Similar to group bonuses, but more likely to use a broad range of performance measures: Cost savings Successful completion of a project Meeting deadlines Depending on the reward system, competition among individuals may be replaced by competition among groups. The organization should carefully set the performance goals for these incentives so that concern for costs or sales does not obscure other objectives, such as quality, customer service, and ethical behavior.
Pay for organizational performance
Two important ways organizations measure their performance are in terms of their profits and their stock price. In a competitive marketplace, profits result when an organization is efficiently providing products that customers want at a price they are willing to pay. Stock is the owners' investment in a corporation; when the stock price is rising, the value of that investment is growing. Rather than trying to figure out what performance measures will motivate employees to do the things that generate high profits and a rising stock price, many organizations offer incentive pay tied to those organizational performance measures. The expectation is that employees will focus on what is best for the organization.
Unpaid family and medical leave cont. (Required by law)
When employees experience pregnancy and childbirth, employers must also comply with the Pregnancy Discrimination Act. If an employee is temporarily unable to perform her job due to pregnancy, the employer must treat her in the same way as any other disabled employee. - e.g., modified tasks, alternative assignments, disability leave, or leave without pay The employer may provide modified tasks, alternative assignments, disability leave, or leave without pay.
