MGT 404 Final Exam
decentralized compensation structure
business units design administer their own system
Goal setting theory
challenging performance goals influence greater intensity and duration in employee performance; employees must believe they can influence performance targets
Scientists and engineers
changing over time and not as unique as they used to be; big focus on perks and work environment (in order to be creative; bigger increases at the beginning of their career); foster collaboration
HMO's (health maintenance organization)
closed network of providers agreed to go to certain providers primary care physician gave all referrals- gatekeeper introduces co-pays covers preventative services
profit sharing plans
comapnywide; focus on predetermined index of profitability; most employees feel as though they do not have a direct impact
ranking format
comparing people to each other to determine relative ordering of the group on some performance measure;
spillover error
continuing to downgrade an employee for performance in prior rating periods
fee for service plans
decent coverage from employer low cost, covered if something went wrong, no preventative care not too expensive for employers
two tier wage plans
differentiate pay based on hiring date; tiers can be used as a cost control strategy to allow expansion or as a cost-cutting device to allow economic survival
other misc benefits
discounts gym memberships child care centers legal advice
Horn error
downgrading an employee across all performance dimensions exclusively because of poor performance in one dimension
risk sharing
base pay is reduced relative to the level offered in a success sharing plan; shift part of the risk from company to employee
exec pay mix
base, short term incentives, long term incentives, benefits, perks
individual incentive plans
based on units of production per time period or time period per unit; offer a promise of pay for some objective, pre-established level of performance; all plans use an established standard for comparing worker performance to determine magnitude of the incentive pay
straight piecework
based on what your produce; for every unit you sell you get the same bonus
performance plans
driven by financial earnings or return measures pay for meeting or exceeding specific goals performance shares and performance units
benefits model
drives desired employee behaviors
401K plan
employee can save pre-tax (and after tax) employers may match some/ all of employee contributions employer contributions may have vesting periods employee contributions immediately vested portable (take it when you quit) some companies allow loans
success sharing
employee pay is constant; variable pay adds on during successful years
Herzberg's two-factor theory
employees are motivated by two motivators hygiene factors and satisfiers; pay level is important- must meet min requirements before performance-based pay can operate as a motivator
subordinates
employees want anonymous submissions, leaders should use feedback to modify their behavior
spillover effect
employers avoid unionization by offering wages, benefits and conditions won ununionized firms; avoid union interference decision making and workers enjoy rewards occurs less often as union power diminishes
tax changes with Obama Care
employers with cadillac health coverage will be taxed on value of plans above a threshold level beginning in 2018
-employee development criterion -administrative criterion -personnel research criterion -economic (cost) criterion -validity criterion
evaluating performance appraisal formats
change
everything you're doing is consistent with culture
360 degree feedback
feedback from peers, manager, self, subordinates and customers
defined benefit plan
fixed or planned benefit upon retirement paid by employer the amount determined by: years of service and salary vesting ERISA
Gainsharing
focus on cost reduction; designed to get people to come up with cost saving ideas; pay offs for teams defined at the level of a strategic business unit
long term incentives
focus on performance beyond one year;
Equal employment opportunity
forces organizations to document decisions to ensure they are firmly tied to performance or expected performance
Employee stock ownership plans
generate long term effects; fairly popular; foster employee willingness to participate in the decision- making process; have little impact on productivity or profit; expiration date
contracts with unions
give the basis of pay (hourly and overtime pay, premium pay and pay schedule) specify occupation wage ranges differential provisions vacation/holiday entitlements
clone error
giving better ratings to individuals who are like the rater in behavior and/or personality
Halo error
giving favorable ratings to all job duties based on impressive performance in just one job function
leniency error
giving people higher ratings than deserved
strictness error
giving people lower scores than deserved
1. FMLA 2. worker's compensation 3. unemployment insurance 4. social security 5. healthcare
government required benefits
central tendency error
grouping too many people in the middle
centralized compensation structure
headquarters designs and administers the compensation system
expectancy theory
i believe if i work hard i can get the desired level of performance, if i get that i believe i will get certain outcomes and then how do i value those outcomes
worker's compensation
injuries on the job
Pay model
internal alignment external competitiveness employee contributions management
Murphy's benefits model
internal fairness external competitiveness drive desired employee behaviors cost effective management
first impression error
snap judgement; developing negative or positive opinion of an employee early on in the review period and allowing that to negatively or positively influence all later perceptions
self others work itself
sources of feedback
high deductible healthcare plan
specific type of PPO; the deductible must be at least single in 2017 $1300 and $2600 for family out of pocket max $6550 for single free preventative care allows you to go on an HSA
reopener clause
specified wages will be renegotiated at a specified time or conditions
special groups
strategically important to the company and their positions hold built in conflict
customer as rater
surveys and mystery shoppers rate performance
group incentive plans
team performance is measured against a set standard to determine incentive pay
managing labor costs and revenues
the cost implications of actions is critical for making sound decisions
Halsey 50/50 method; rowan plan; Gantt plan
the standard time for the completion of a job and the rate per hour is fixed; In case, the worker completes the work in less than the standard time; then he is entitled to a bonus along with the time wages
Peers as raters
they have an undistorted perspectives, however, they have no rating experience and are very lenient
self as rater
they have complete knowledge of performance, yet are most lenient; used for development rather than administrative
Supervisors as raters
they have experience rating employees and know the job requirements, however, they are prone to leniency errors
Merit bonuses
thought to be substitute for merit pay; based on performance and received as an end of year bonus; not built into base pay; can be less expensive than merit pay in the long run
compa ratio
to assess how pay relates to the midpoint we use this index; avg rate actual paid/ range midpoint
budget control: top-down
top management sets an estimated pay increase budget for the whole organization; typical approach is planned-pay level rise
attract, retain and motivate performance employees misperceive pay system
two reasons to communicate pay information
unemployment insurance
typically, state-run, paid premiums if there is a layoff, you can get help while you look for another job
Management by objectives
uses outcomes as the standards of performance measure; performance objectives-results; most common with some combo of behavioral scales
time off
vacation holidays leaves of absences flexible scheduling
defined contribution plan
variable/ unknown payout at retirement-- result of invest choices/ market performance defined: what goes in (contributions by employee and employer)
insurance
vision dental life disability long term care
long term care plans
waiting period (you pay for first 'x' number of days) daily or monthly benefit amount benefits period (number of years covered) inflation protection option
Patient and protection affordable care act (Obama care)
wanted to get more people covered (individual mandate + no insurance = penalty) expands medicaid majority of people are covered through employers large employers have to provide insurance or they will pay fees small employers- if they purchase health insurance for employees they get a tax credit
PPO (preferred provider organization)
what most employers have must pay premiums- out of paycheck cost vision and dental are usually separate preventative services-free prescription drugs usually have a co-pay
-behaviors observed -competition among departments -organization values -status difference between departments -economic conditions
what performance ratings are influenced by
rating format
when adjectives are used as anchors; requires raters to evaluate employees against a standard rather than each other
out of pocket expenses
when you use the insurance; co-pays deductibles co-insurance
tournament theory
where wage differences are based not on marginal productivity but instead upon relative differences between the individuals
administration
who is covered? communication decisions how much choice how financed cost containment
differentiate yourself from other companies government required tax favored treatment of many benefits economies of scale unions mid-20th century, post war wage and price controls
why offer benefits
retention sense of ownership
why pay long term incentives
essay format
written letter from boss as to what went well and what didn't; supervisors answer open-ended questions describing employee performance
social security
6.2% is capped at $127,200; employers match 7.65% your pay
Behavioral anchored scales
seems to be most common format using behaviors as descriptors;
pay for performance plan
signals a movement away from entitlement toward pay that varies with performance
compensation promotions terminations/layoffs training selection/hiring
HR administrative decisions based off of performance management
key elements in a good appraisal
- culture and strategy determine measure factors -involve employees in all stages of the process -raters should be trained and motivated -raters should maintain a diary -raters should conduct a pre-diagnosis -feedback must be timely
key elements of gain sharing
- strength of reinforcement - productivity standards - sharing the gains - scope of the formula - perceived fairness of formula - ease of administration - production variability
Reasons for performance management
-motivation -developmental -administrative -strategic
dimensions of the union impact on the structuring of wage packages
-the division between direct wages and employee benefits -the evolution of two-tier wage plans
union role in wage and salary administration
1. declining industries are unionized, growing industries, less so 2. workers do not see unions as solution 3. reduced union organizations efforts 4. management is taking increasingly hard stance against unions in general and union demands in particular
performance appraisal cycle
1. goal setting 2. feedback and coaching 3. rewards and reinforcement
retirement savings
401k pensions
taylor differential piece rate system
Merrick multiple piece-rate system- no longer one to one ratio- for every 5 cars you get 100 and then after that you get an additional 50
recency error
allowing performance at the end of review period play too large of a role in determining an employee's rating for an entire period
base pay and variable pay
avg cash compensation and average benefit cost
Balanced scorecard approach
looks at what contributes value in an organization; success depends on satisfied customers and employees;
Supervisors pay mix
meet demands of upper management and the needs of employees; equity is major compensation challenge; One compensation strategy puts base salary of supervisors at an amount exceeding the top-paid subordinate; Other methods are to pay supervisors for scheduled overtime or to use variable pay
Merit pay
most basic way to pay individuals; links increases in base pay to how highly employees are rated on a performance evaluation; employee achievements are rewarded every year then employee remains on the job; small but significant impact on performance; some say it doesn't achieve desired goal
equity theory
motivated if they feel like they are being paid fairly; get out what you put in; most communicate effectively or employees will make assumptions; influence perception of fairness based on communication
variable pay
must be re-earned each period; control based on performance
deferred wage increase
negotiated at initial contract with timing and amount specified
sales compensation strategy
new customers or retention; paid on value or margin; is customer satisfaction important to compensation
stock awards
no expiration date; a grant of company stock in which the recipient's rights are restricted until the shares vest
family medical leave act
not paid, just time off
sales
not strictly an HR compensation work- shared between HR and marketing usually to find different mix; base and commission
core and contingent
number of workers and hours worked
labor costs
number of workers and hours worked X (avg cash compensation + avg benefit cost)
broad bands
offer managers flexibility; may be more about career management than pay decisions
Performance review
one is to guide allocation of merit increases; used in a wide variety of decisions
individual spot awards
only 35 percent of companies use them; 74 percent said effective; usually rewarded for exceptional performance
Health care benefits- annual cycle
open enrollment -timeframe -communications -choices -discount -enrollment measures
flexible spending account
optional; allows you to set aside re-tax money to cover out of pocket healthcare expenses make annual decision as to how much you want to set aside use it or lose it new employer can allow either $500 rollover or some employers extend the time frame for using it to March 15 next year
standard hour and bedeaux plans
pay you for how long it should have taken you to produce in that short time period
agency theory
people act in their interest for their outcome- must be in company's best interest; incorporates the political motivations in the corporate world
Maslow's need hierarchy
people are motivated by inner needs; needs form a hierarchy from most basic to high order; performance based pay may be demotivating if it impinges upon employee's capacity to meet needs
cost of living adjustment
periodic adjustments based on changes in the consumer price index
poorly defined goals, unsure how performance is evaluated, no guidance on how to improve, no differences among good-negative-poor performances
problems with feedback
balanced scorecard bonus program
profit revenue customer satisfaction inventory turnovers employee satisfaction
changes that came from Obama care
provides coverage for dependent children up to age 26 prohibits insurers from rescinding coverage prohibits annual/lifetime limits on coverage prohibits pre-existing condition exclusions for children and later adults as well requires certain preventative services be provided without charge requires qualified coverage to meet certain min coverage levels
maturity curve
quite valuable right out of school but they eventually become stale overtime; less and less increases in pay
pay increase guidelines
raises as budgetary line items
embedded controls
range minimums and maximums; max is an important cost control
range midpoints
reflect the pay policy line in relation to external competition
Reinforcement theory
rewards reinforce performance; timing of payouts is important; rewards must follow directly after behaviors to be reinforcing
