HRM Final Exam
Results in most complete assessment possible
360-Degree Performance Appraisal
•Some employees may whistle-blow or file lawsuits to seek help outside the organization.
Behavior Change
•Builds on critical-incidents. Behaviors rated in terms of scale showing specific statements that describe behaviors at different levels of performance
Behaviorally Anchored Rating Scale (B A R S)
Higher performers receive a higher merit increase (%) than low performers. However, the merit increase, as a percentage, will typically decrease as the CR begins to reach the top of the pay range.
Compa-ratio
is the employee's salary divided by the midpoint of his or her salary range.
Compa-ratio
1.Experience. 2.Education. 3.Complexity. 4.Working conditions. Responsibility
Compensable Factors
rater compares individual not against objective standard but against other employees
Contrast error
Enacted in 1938 •Established Minimum Wage üSet minimum wage at $0.25/hr •Maximum workweek at 44 hours •Overtime Pay •Recordkeeping Child Labor
Fair Labor Standards Act (FLSA)
helps fund both social security and Medicare programs, which provide benefits for retirees the disabled and children
Federal Insurance Contribution Act
assigns a certain percentage of employees to each category in a set of categories
Forced-distribution method
•Turnover initiated by employer. •Often occurs when employees would prefer to stay. Job termination
Involuntary Turnover
•Measures relative internal worth of organization's jobs. •Jobs rated for each factor.
Job Evaluation
Define performance outcomes, define employee goals, Provide support, Evaluate performance, Provide consequences, Identify improvements.
Know the order in which the six steps occur
•Stock options. Stock purchase plans
Long-Term Incentives
•Not rolled into base pay. •Employee must re-earn bonus during each period. May be a one-time reward
Performance Bonuses
•Tardiness or absenteeism, job transfer request, or resigning.
Physical Job Withdrawal
Outcome Fairness, Procedural, Interactional Justice
Principles of Justice
•A judgement that fair methods were used to determine the consequences. Procedures should be consistent, unbiased, accurate, correctable, consider everyone affected, and ethica
Procedural justice
•Organizations that offer similar goods and services. Organizations compete on quality, service, and price
Product Markets
•Payments are a percentage of organization's profits and are not part of employees' base salary. May encourage employees to think like owners
Profit Sharing
•Unemployed through no fault of your own üDid not quit üDischarged for cause üCannot be due to labor dispute Worked during a specified period, usually up to 18 months. •Actively seeking work each week you are collecting benefits.
Unemployment e;egibiluty requires the following
•Benefits for up to 26 weeks üSome states allow an additional 13 -20 weeks if unemployment situation has worsened in that state.
Unemployment insurance
measure all relevant aspects of performance and not the irrelevant ones
Validity
•Turnover initiated by employees. •Often occurs when an organization would prefer to keep them. Employee retires or moves on to new opportunity
Voluntary Turnover
•Organizations with 50 or more employees, within 75 miles of the employee's worksite, must provide up to 12 weeks of unpaid leave within a 12-month period: üAfter childbirth or adoption oWithin one year of event üTo care for a seriously ill family member üFor an employee's own serious illness •Can take in increments of hours, days, weeks, etc.
family and medical leave act (FLMA)
•Must have worked a minimum of 1,250 hours in the twelve months prior to the leave. Have worked for the employer for twelve months
family and medical leave act (FLMA) Eligibility
rater lets their opinion of one quality color their opinion of others
rater bias
Five states have not adopted a state minimum wage: Alabama, Louisiana, Mississippi, South Carolina and Tennessee. Two states, Georgia and Wyoming, have a minimum wage below $7.25 per hour. In all seven of these states, the federal minimum wage of $7.25 per hour applies
the effective minimum wage rate is for those states that do not have a state minimum wage
•Organization distributes shares of stock to all its employees by placing them in a trust Most common form of ownership
•Employee stock ownership plan (ESOP)
Legal, Market, and Goals, that are used to develop a pay structure
3 main issues in developing a pay structure
Social security, unemployment insurance, workers compensation, family and medical leave, health care
Benefits Required by Law
Teams perform work, Employees participate in selection, Employees receive formal performance feedback and are involved in performance improvement process, Ongoing training is emphasized and rewarded, Employees' rewards and compensation relate to company's financial performance
Characteristics of High Performance
F L S A sharply restricts use of child labor. •Children under 14 may not be employed. •Children aged 14 and 15 may work only outside school hours, in nonhazardous jobs, and for limited time periods. •Children aged 16 and 17 may not be employed in hazardous jobs.
Child Labor
Ratio of average pay to the midpoint of pay range. Ensures that pay policies and practices match. •If average equals midpoint, C R is 1. •If C R is greater than 1, average pay is above midpoint. If CR is less than 1, average pay is below midpoint. IMPORTANT! We discussed, in class the impact of a CR below and above the impact has on the employee and the employer. We also discussed the reasons WHY the CR may be below and above
Compa-Ratio
•Employers required to offer employees a temporary (36 months) continuation of group health coverage that would otherwise be terminated due to: ü layoff, üreduction in hours, üemployee's death (for dependents), or üDivorce or legal separation of the spouse from the covered employee •At current Group Plan rates offered by the employer •Paid by the employee
Consolidated Omnibus Budget Reconciliation Act (COBRA)
Recruiting, selecting, and training replacements. Lost productivity. Loss of talented employees.
Cost of Voluntary Turnover
Recruiting, selecting, and training replacements. Lost productivity. Lawsuits. Workplace violence.
Costs of Involuntary Turnover
•Specific instances of effective and ineffective employee behavior documented. Employees receive feedback about what they do well and what they do poorly
Critical-Incident Method
guarantees specified level of retirement income Retirement Plans Meets requirements of Employee Retirement Income Security Act Aided by the Pension Benefit Guarantee Corporation
Defined benefit plan
•employer sets up account for each employee; Both the employer and employee contribute •Profit-sharing and employee stock ownership plans Section 401(k) plans
Defined-contribution plan
•Discipline decisions must be made without regard to age, sex, race, or other protected status. Carefully documented discipline can avoid claims of discrimination
Discrimination
rater uses only part of rating scale
Distributional error
Organization Structure, Task design, People, Reward systems, Information systems
Elements of a High-Performance Work System
Referral service employees can use to seek professional treatment for emotional problems or substance abuse
Employee Assistance Programs (E A P)
Engaged employees provide competitive advantages: •Higher productivity. •Better customer service. Lower turnover
Employee Engagement
Officially known as Adams Equity Theory of Motivation. Developed by John Stacey Adams in 1963
Employee Judgments about Pay Fairness
üRequires plans to provide participants with plan information including important information about plan features and funding; üGives participants the right to sue for benefits and breaches of fiduciary duty if a defined benefit plan is terminated, guarantees payment of certain benefits through a federally chartered corporation, known as the Pension Benefit Guaranty Corporation (PBGC)
Employee Retirement Income Security Act of 1974
1.Putting forth less effort (reducing inputs). ● 2.Finding ways to increase outcomes (for example, stealing). Withdrawing by leaving or refusing to cooperate
Employees who perceive they are under-rewarded are likely to make up the difference by doing what?
Two employees who do the same job cannot be paid different wages because of race or age
Equal Pay Act of 1963
employees judge fairness in different ways. •External equity: fairness of one's pay relative to what employees in other organizations earn doing the same job. Internal equity: fairness of one's pay relative to pay of co-workers. Know that Input is more than just the amount of work and That Output is more than just financial rewards
Equity theory
Contrast error, Distribution error, rater bias
Errors in Performance Management
Benchmarking. Multiple sources of data: •Pay surveys. •Bureau of Labor Statistics (B L S). •Society for Human Resource Management (S H R M). Consulting groups
Gathering information about market pay involves
•Lists traits and provides a rating scale for each trait. •Employer uses scale to indicate extent to which employee displays each trait. Rating scales are subjective and vary by employer
Graphic Rating Scale
Lower monthly, in network only, to see a specialist
HMO
•Principle that says discipline should be like a hot stove: •Glowing stove gives warning not to touch. Anyone who ignores is burned
Hot-Stove Rule
, all the elements—people, technology, and organizational structure—work together for success.
In a high-performance work system
Enable sharing information widely
Information Systems
•Concerns how managers interact with employees. Manager should explain how the action is procedurally just and treat the employee with dignity
Interactional justice
consistency of results when more than one person measures performance
Interrater reliability
•Organizations must compete to obtain human resources. Competition establishes minimum pay to hire an employee for a job
Labor Markets
•People at each level of organization set goals in process that flows from top to bottom. •Employees at all levels contribute to organization's overall goals. •Set goals become the standards for evaluating employee performance. Three components: 1.Goals are specific, difficult, and objective. 2.Managers work with employees to set goals. Manager gives objective feedback to monitor progress.
Management by objectives (M B O)
Simple ranking, forced distribution method, paired comparison method
Methods for measuring performance
•Uses several statements to describe each trait. Employer scores employee in terms of how employee compares to statements
Mixed-Standard Scale
Employers should be aware of satisfaction levels so they can make changes when employees are dissatisfied. Job satisfaction survey is a common measurement. H R can analyze data related to employee separation and retention. Exit interviews can provide information about retainment
Monitoring Job Satisfaction
Organization's policy of making managers available to hear about complaints and conflict
Open Door Policy
The way organization groups people into divisions, departments, and reporting relationships.
Organization Structure
•Focuses on the ends of the discipline process. •Depends on employees' judgment that the consequences of a decision are just. •Everyone should know what to expect through clearly communicated policies. Outcome should be proportionate to the behavior
Outcome fairness
High productivity and efficiency, Higher profits, High product quality, Great customer satisfaction, Low employee turnover
Outcomes of a High-Performance Work System
•Overtime is hours worked beyond 40 hours per week. •Under F L S A, employers must pay 1.5 times employee's usual rate for overtime hours. •Exempt employees: managers, outside salespeople, and other employees not covered by the F L S A requirement. Nonexempt employees: employees covered by FLSA requirements for overtime pay
Overtime Pay
Higher monthly premiums, flexibility to see providers, no referrals needed
PPO
compares each employee with the others to establish rankings
Paired-comparison method
•Known as FICA (Federal Insurance Contributions Act) •Employees pay 6.2% •Employers pay 6.2% üSelf-employed pays both •Applies to gross wages up to $137,700
Paying for social security
•Process for resolving conflict. •Panel listens to case and works to help parties agree to settlement. Panel made of representatives from organization at same level as people in dispute
Peer review
•Protects retirees and their families in private-sector defined benefit pension plans due to: Employer terminating the plan. bankruptcy
Pension Benefit Guarantee Corporation
Should be well suited to and prepared for jobs.
People
Formal discipline process; consequences become more severe with each repeat offense: Be prepared to provide example
Progressive Discipline
Unofficial warning, office warning, 2nd written warning, temp suspension, termination
Progressive Discipline Responses
Psychological Withdrawal •Employees are physically at work but their minds are elsewhere. •Decrease in job involvement. Decrease in organizational commitment
Psychological Withdrawal
yield consistent results over time
Reliability
•Providing management training and employee benefits that enable discipline to drive performance improvement. •Promoting employee engagement. •Preventing job withdrawal. •Promoting job satisfaction.
Retaining Employees
Defined contribution plans and Define benefit plans
Retirement Plans
Encourage people to strive for goals.
Reward Systems
•Incentive pay calculated as a percentage of sales. Some earn commission in addition to base salary
Sales Commissions
Establishing fair and legally defensible processes for discipline (including, if necessary, termination
Separating Employees
Bonuses based on R O I, year's profits, or other measures related to goals
Short-Term Incentives
managers rank employees from highest to poorest performer
Simple ranking
•Employers and employees share cost through payroll tax to provide the following benefits in the OASDHI program: •Old Age (retirement) insurance •Survivor's insurance •Disability insurance
Social Security
starts at 66 yrs old or 67
Social security age
62, 70%, 63 75%, 64 80%, 65 86%, 66 93%, 70, 124%
Social security retirement percentage
•Rights to buy certain number of shares of stock at specified price •Within a specified time in the future
Stock Options
How details of organization's activities will be grouped, whether into jobs or team responsibilities
Task Design
Making jobs more complex and meaningful can increase job satisfaction.
Tasks and Roles
consistency of results over time
Test-retest reliability
Satisfied workers, low absenteeism, lower costs
What is the impact on a company that offers interesting jobs?
Higher profits
What is the impact on cost...and why?
Exclusive Remedy — a component of workers compensation statutes that 1)bars employees injured on the job from making a tort liability claim against their employers. The benefits provided under workers compensation are the sole remedy available to injured employees
Workers Compensation
1.Disability income a)Generally, two-thirds of workers' earnings and tax free 2.Medical care 3.Death benefits 4.Rehabilitative benefits
Workers compensation: Four major categories of benefits:
•May not violate implied agreement. •Employer promised job security. Action inconsistent with company rules •May not violate public policy. Terminating employee for refusing to do something illegal or unsafe
Wrongful Discharge