MGT 386 Final
portability
- transferability of pension benefits for employees moving to a new organization. ERISA does not require mandatory portability of private pensions. On a voluntary basis, the employer may agree to let an employee's pension benefit transfer to an individual retirement account (IRA) or, in a reciprocating arrangement, to the new employer (e.g., 401 to 401)
dual career ladders
Presence of two different ways to progress in an organization, each reflecting different types of contribution to the organization's mission. The managerial ladder ascends through increasing responsibility for supervision or direction of people. The professional track ascends through contributions of a professional nature that do not mainly entail the supervision of employees.
maturity curve
a plot of the empirical relationship between current pay and years since a professional has last received a degree (YSLD), t
standard rating scale
adjectives are used as anchors (above average, average, below average)
management by objectives (MBO)
an employee planning, development and appraisal procedure in which a supervisor and a subordinate, or group of subordinates, jointly identify and establish common performance goals. employee performance on the absolute standards is evaluated at the end of the specified period.
copay
copay requires that employees pay a fixed or percentage amount for coverage
straight ranking
employees ranked relative to each other
affirmative action
firms with government contracts must take affirmative steps to hire women and minorities in proportion to their presence in the labor force (this is not a quota system)
traditional time-off plans (TTO)
paid vacation, holidays (or pay if worked), sick leave, and personal leave, tracked separately.
deferred compensation
pay approach that provides income to an employee at some future time as compensation for work performed now. types of deferred compensation programs include stock option plans and pension plans
seniority increases
pay increases tied to a progression pattern based on seniority. to the extent performance improves with time on the job, this method has the rudiments of paying for performance
Performance Metrics
quantitative measures of job performance
experience rating
rating system in which insurance premiums vary directly with the number of claims filed. an experience rating is applied to unemployment insurance and worker compensation and may be applied to commercial health insurance premiums. in a community rating system, insurance rates are based on the medical experiences of the entire community
ranking formats
require that the rater compare employees against each other to determine relative ordering
short-term disability plans (STD)
(worker's compensation) Legally required programs in each state that provide payment of medical expenses and compensation for lost wages resulting from work-related injuries or disabilities.
paired comparison ranking
Forces raters to make ranking judgements about discrete pairs of people. Each individual is compared separately with all others in a work group (person who wins most paired comparisons is ranked top in the group)
401k
a 401k plan, so names for the section of the internal revenue code describing the requirements, is a savings plan in which employees are allowed to defer pre-tax income
defined benefits plans
a benefit option or package in which the employer agrees to give the specified benefit without regard to cost max. opposite of defined contribution plan
defined contribution plans
a benefit option or package in which the employer negotiates a dollar max payout. any change in benefit costs over time reduces the amount of coverage unless new dollar limits are negotiated
vesting
a benefit plan provision that guarantees that participants will, after meeting certain requirements, retain a right to the benefits they have accrued or some portion of them even if employment under their plan terminates before retirement
pay for knowledge plans
a compensation practice whereby employees are paid for the number of difference jobs they can adequately perform or the amount of knowledge they possess.
criterion deficiency
a criterion is deficient if it fails to include all of the dimensions relevant to job performance (example: excluding keyboarding skills for a secretary's job performance)
cash balance plans
a defined benefit plan that looks like a defined contribution plan. employees have a hypothetical account, such as 401k into which is deposited what is typically a percentage of annual compensation. the dollar amount grows both from contributions but the employer and some predetermined interest rate (often equal to 30 year treasury certificates)
profit-sharing plan
a plan that focuses on profitability as the standard for group incentive. these plans typically involve one of three distributions 1) cash or current distribution plans provide full payment to participants soon after profits have been determined (quarterly/annually) 2) deferred plans have a portion of current profits credited to employee accounts, with cash payments made at time of retirement, disability, severance or death 3) combination plans that incorporate aspects of both current and deferred options
point of service plan (POS)
a point-of-service plan is a hybrid plan combining health maintenance organization (HMO) and preferred provider organization (PPO) benefits.
reopener clause
a provision in an employment contract that specifies that wages, and sometimes such nonwage items as pension/benefits, will be renegotiated under certain conditions (changes in cost-of-living, organization, profitability, and so on).
360-degree feedback
a rating method that assesses employee performance from five points of view; supervisor, peer, self, customer, and subordinate
employee stock ownership plan (ESOP)
a retirement plan in which the company contributes its stocks as the retirement benefit.
agency theory
a theory of motivation that depicts exchange relationships in terms of two parties: agents and principals. According to this theory, both sides of the exchange will seek the most favorable exchange possible and will act opportunistically if given a chance. As applied to executive compensation, agency theory would place part of the executive's pay at risk to motivate the executive (agent) to act in the best interests of the shareholders (principals) rather than in the executive's own self-interests.
cost of living adjustments COLA
across the board wage and salary increases or supplemental payments based on changes in some index of prices usually the consumer price index (CPI). If included in a union contract, COLAs are designed to increase wages automatically during the life of the contract as a function of changes in the CPI.
pension benefit guaranty corp (PBGC)
agency to which employers are required to pay insurance premiums to protect individuals from bankrupt companies (and pension plans). In turn, the PBGC guarantees payment of vested benefits to employees formerly covered by terminated pension plans.
consumer driven healthcare benefits
aka market-based healthcare, consumer-based health care. costs link consumer choice of more or less expensive options to higher or lower individual costs
criterion contamination
allowing non-performance factors to affect performance scores (including keyboarding skills for an auto mechanic's job performance)
cost containment
an attempt made by organizations to contain benefit costs, such as imposing deductibles and coinsurance on health benefits or replacing defined benefit pension plans with defined contribution plans
long-term disability plans (LTD)
an insurance plan that provides payments to replace income lost through an inability to work that is not covered by other legally required disability income plans.
essay format
an open-ended performance appraisal format. the descriptors used can range from comparisons with other employees to adjectives, behaviors and goal accomplishments
Brito v. Zia company
benchmark case that interpreted performance evaluation as a test, subject to validation requirements, and used these evaluations based on a rating format to lay off employees, resulting in a disproportionate number of minorities being discharged
salary continuation plans
benefit options that provide some form of protection for disability. Some are legally required, such as worker's compensation provisions for work-related disability and social security disability income provisions for those who qualify.
flexible benefit plan (aka section 125 plan, cafeteria-style plan)
benefit package in which employees are given a core of critical benefits (necessary for min security) and permitted to expend the remainder of their benefits allotment on options that they find most attractive
paid time off plans (PTO)
eliminates the distinction between sick days and other paid days off, thus eliminating the incentive to "fake" illness.
employee retirement income security act (ERISA)
for employers who choose to have a retirement plan, this act sets some formidable rules that must be followed to be in compliance
wage and price controls
government regulations that aim at maintaining low inflation and low levels of unemployment. they frequently focus on "cost-push" inflation, limiting the size of pay raises and the rate of increases in prices charged for goods/services. (used for limited time periods only)
worker's compensation (state)
legally required programs in each state that provide payment of medical expenses and compensation for lost wages resulting from work-related injuries or disabilities
family medical leave act (FMLA)
legislation passed in 1993 that entitles eligible employees to receive unpaid leave up to 12 weeks per year for specified family or medical reasons such as caring for ill family members or adopting a child
benefit limitation
limit of disability income payments to some max percentage of income and limit of medical/dental coverage for specific procedures to a certain fixed amount
lump-sum awards
payment of entire increase (typically merit-based) at one time. Because amount is not factored into base pay, any benefits tied to pay do not increase.
contingent workers
people who have no expectation of continued employment and/or expect their employment to be temporary.
probationary periods
period during which new employees are excluded from benefits coverage, usually until some term of employment (3 months) is completed
claims processing
procedure that beings when an employee asserts that a specific event (disablement, hospitalization, unemployment) has occurred and demands that the employer fulfill a promise for payment. as such, a claims processor must first determine whether the act has, in fact, occurred.
social security (federal)
program based on federal law that provides retirement and disability benefits
human resource planning system
put in place by the benefit administrator to make realistic estimates of HR needs and avoid a pattern of hasty hiring and morale-breaking terminations
alternation ranking
raters rank the best and the worst employee, then the second best and second worst employee, and so on
rating formats
require raters to evaluate employees on some absolute standard rather than relative to other employees. Each performance standard is measured on a scale such than appraisers can check the point that best represents the employee's performance
unemployment benefits
state administered program that provides financial security for workers during periods of joblessness
unemployment insurance (federal)
state administered program that provides financial security for workers during periods of joblessness
individual retirement accounts (IRAs)
tax-favored retirement savings plans that individuals can establish themselves
employee benefits
that part of the total compensation package, other than pay for time worked, provided to employees in whole or in part by employer payments (life insurance, pension, worker's comp, vacation)
base salary
the basic cash compensation that an employer pays for the work performed. Tends to reflect the value of the work itself and ignore the differences in individual contributions.
spillover effect
the fact that improvements obtained in unionized firms "spill over" to nonunion firms seeking ways to lessen workers' incentive for organizing a union.
pay increase guidelines
the mechanisms through which levels are translated into pay increases and, therefore, dictate the size and time of the pay reward for good performance
outsourcing
the practice of hiring outside vendors to perform functions that do not directly contribute to business objectives and in which the org does not have a comparative advantage
performance standard training
training that gives performance appraisers a frame of reference for making ratee appraisals.
performance-dimension training
training that gives performance appraisers an understanding of the dimensions on with to evaluate employee performance
behaviorally anchored rating scale (BARS)
variants on standard rating scales in which the various scale levels are anchored with behavioral descriptions directly applicable to jobs being evaluated (grammar exceeds standards, grammar meets, grammar does not exceed)
two-tier pay plans
wage structures that differentiate pay for the same jobs based on hiring date. A contract is negotiated that specifies that employees hired after a stated day will receive lower wages than their higher seniority peers working the same or similar jobs.
