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139 Cards in this Set
- Front
- Back
performance management
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whole process through which managers ensure that employee's activities and outputs contribute to the organizations
- specify relevant aspects of performance and design system /process for measuring performance - performance appraisal - providing feedback |
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performance appraisal
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measurement of specified areas of a particular employee's performance
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major decisions/issues in forming a performance mgmt. system
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- identify purposes/uses of performance data
- identify role/behavioral requirements for jobs - measures to use - who is appraising - how to recognize and reduce rater errors |
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purposes of performance mgmt.
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- strategic
- administrative - developmental |
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performance appraisal - developmental
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purpose: improve performance
basis for comparison: absolute standard role of manager: counseler |
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performance appraisal - administrative
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purpose: info. for: pay increases, promotions, terminations
basis for comparison: relative standard role of manager: judge |
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performance measurement approaches - comparative
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simple ranking, forced distribution, paired comparison/alternation ranking
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performance measurement approaches - trait or attribute oriented
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common but not recommended; graphical rating scales
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performance measurement approaches - behavioral
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BARs (behaviorally anchored rating); BOS (behavioral observation scale)
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performance measurement approaches - goal or results oriented
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management by objective (MBO); financial goals/metrics
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performance measurement approaches - quality
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statistical quality control
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performance measurement approaches - combo. of several measures
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balance scorecard
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criteria for evaluating performance measures
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validity, reliability, acceptability
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strategic congruence
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alignment of performance system with organization's strategic goals
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job performance measure
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contamination
validity: you want to maximize this overlap defiancy |
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interrater-reliability
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two ppl. give the same or almost the same rating of target
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test-retest reliability
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consistent over time; goal:t o be able to know that chages over time are due to real changes in performance, not poor reliability
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acceptability
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categories of perceived fairness/justice:
- procedural - interpersonal - outcome |
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specificity
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does the measure give guidance to employees about what is expected and how to meet expectations
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how do performance measures stack up?
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SEE CHART - 3/13 slideshow
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source for performance measures
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supervisors
peers subordinates self customers ** sometimes multiple raters - 360 feedback |
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criteria for choosing evaluation sources
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- evaluator should know the objectives of employee's job
- evaluator should have opportunity to observe peformance - evaluator should be able to determine whether or not performance is satisfactory |
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common errors
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- "similar to me": rate similar others higher
- contrast: person's rating affected by comparison with another person - distributional errors: central tendency, lenience/strictness - halos/horns: allow good/bad performance of one aspects in job to influence perception in other areas - recency: recent performance given more weight in evaluation - fundamental attribution error: actor-observer bias - representativeness: stereotyping - availability - anchoring |
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overcoming rater errors
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training errors; having someone else review all ratings prior to finalizing them
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pitfalls to avoid in appraisal
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- don't focus on one incident
- don't go solely on memory - avoid halo and horn errors - avoid bias based on personal feelings - don't base current performance on past - don't rush appraisal |
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tips for improving performance feedback
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- give f/b frequently
- create the right context for discussion - encourage participation during session - praise effective performance - focus on problem-solving - focus on behavior and results - minimize criticism - set gaols and a date to review progress |
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solid performance
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high ability and motivation
managers should provide developmental oppurtunites |
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misdirected effort
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lack of ability but high motivation
managers should provide skill development or training |
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underutilizers
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high ability but lack of motivation
managers need to consider actions that focus on interpersonal problems or incentives |
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deadwood
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low ability and motivation
managerial action, outplacement, demotion, firing, etc. |
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interrater-reliability
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two ppl. give the same or almost the same rating of target
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test-retest reliability
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consistent over time; goal:t o be able to know that chages over time are due to real changes in performance, not poor reliability
|
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acceptability
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categories of perceived fairness/justice:
- procedural - interpersonal - outcome |
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specificity
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does the measure give guidance to employees about what is expected and how to meet expectations
|
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how do performance measures stack up?
|
SEE CHART - 3/13 slideshow
|
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source for performance measures
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supervisors
peers subordinates self customers ** sometimes multiple raters - 360 feedback |
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criteria for choosing evaluation sources
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- evaluator should know the objectives of employee's job
- evaluator should have opportunity to observe peformance - evaluator should be able to determine whether or not performance is satisfactory |
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common errors
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- "similar to me": rate similar others higher
- contrast: person's rating affected by comparison with another person - distributional errors: central tendency, lenience/strictness - halos/horns: allow good/bad performance of one aspects in job to influence perception in other areas - recency: recent performance given more weight in evaluation - fundamental attribution error: actor-observer bias - representativeness: stereotyping - availability - anchoring |
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overcoming rater errors
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training errors; having someone else review all ratings prior to finalizing them
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pitfalls to avoid in appraisal
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- don't focus on one incident
- don't go solely on memory - avoid halo and horn errors - avoid bias based on personal feelings - don't base current performance on past - don't rush appraisal |
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tips for improving performance feedback
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- give f/b frequently
- create the right context for discussion - encourage participation during session - praise effective performance - focus on problem-solving - focus on behavior and results - minimize criticism - set gaols and a date to review progress |
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solid performance
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high ability and motivation
managers should provide developmental oppurtunites |
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misdirected effort
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lack of ability but high motivation
managers should provide skill development or training |
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underutilizers
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high ability but lack of motivation
managers need to consider actions that focus on interpersonal problems or incentives |
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deadwood
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low ability and motivation
managerial action, outplacement, demotion, firing, etc. |
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involuntary employee seperation
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- reductions in force (RIF) or layoffs (ex: shut downs)
- elimination of jobs - temp. layoffs - discipline related termination |
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voluntary employee seperation
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- RIF done with early retirement or other voluntary packages
- other reasons (ex: staying home w/ family, going back to school, etc.) undesirable if leavers are good workers |
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legal issues in downsizing
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with RIF:
- can't be based on gender, race, disability, age, or another protected class - OK if job related or based on objective criteria employer should articulate legitimate business reason clear and consistent communication to avoid perception of bias written procedures mgmt. training independent review of decisions by legal counsel prior to implementing RIF incentives often offered for vol. RIFs - potential legal issues with ADEA b/c it can affect older workers - safe harbors exist such that employers following very specific guidelines are not deemed to violate ADEA employees sometimes give up right to sue over employment disputes if waivers are signed |
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WARN act
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notifications requires for mass layoffs and plant shut downs
applies to all employers except governments and small employers; 60 days advance notice when event occurs; - plant closing: perm. or temp. shutdown if employment loss for at least 50 employees for any 30 day period - mass layoff: employment loss at a single site during any 30 day period for at least 50 employees who represent 33% or more active employees or at least 500 employees |
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ways to create more positive outcomes during downsizing and layoffs
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advanced notice of downsizing
outplacement assistance consideration given to layoff alternatives prior to layoff: - worksharing programs - hiring freeze - early retirement packages |
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managing involuntary turnover due to discipline issues
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an effective discipline and discharge policy includes:
- attention to perceptions of justice (3 forms) - progressive discipline - process for appeals - employee assistance programs - outplacement counseling |
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progressive discipline examples
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unofficial verbal warning
official written warning, possible second warning with suspension threat suspension termination |
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tips for termination
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- don't let it get personal
- keep interview brief - meet in nuetral and private place - have someone else in the room - friday vs. monday debate: reasons why mon. is not always such a good day to terminate - get terminated employee out of the workplace fast and make arrangements to deal with belongings - have a plan in place to deal with violent employees |
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voluntary turnover
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can happen for many reasons: another job, staying with family, retirement, etc.
if employee leaves voluntarily, try to learn reasons for leaving document and use info. to spot patterns |
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retirees
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many workers are actively trying to keep older workers on the job longer to address impact of labor shortages
older works often want to work longer than traditional retirement age -- most plan to work part-time after retirement or don't plan to |
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ways to keep older workers
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health benefits, wellness programs, health screenings
training opportunities flex. schedules phased retirement 401(k) catch up and additional time off adaption to physical requirements of job |
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compensation strategies
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base pay
pay continent on performance ** "cash compensation" |
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benefit strategies
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benefits
** "fringe compensation" |
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minimum wage act
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5. 85 as of 7/24/07; as off 7/24/08 7.25
overtime restricts child labor |
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prevailing wage laws
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davis-beacon
walsh-healey services contract act |
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base pay systems
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internal pay equity: how should jobs w/in firm be paid relative to eachother
external pay equity: how should jobs be priced to be competitive in ext. mkt. |
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performance-contingent incentive systems
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individual pay: how do we differentiate between workers for performance, seniority, job skills, etc.
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internal pay structure
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focus of comparison: different jobs in the same company
consequences of fairness/unfairness perceptions: internal moves (promotion, transfer); cooperation among workers; employee attitudes admin. tools: job evaluation |
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external pay level
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focus of comparison: same job in other organizations
consequences of fairness/unfairness perceptions: ext. moves (attraction/retention of employees), labor costs, employee attitudes admin tool: mkt. surveys |
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job structure
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ordering of jobs based on content or relative value
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developing internally consistent structure
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- begins with job analysis
- main tool: job evaluation ranking classification point factor |
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point factor system
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- compensable factors (what job characteristics are valued and important enough to pay for)
universal factors: skill, effort, responsibility, working conditions company specific factors: customer focus, prob. solving, innovation (job related, should support business strategy) |
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product-mkt. competition
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upper bound on labor cost (staffing level, ave. cost per employee)
companies are constrained in how much they pay by how much their product mkt. competitors are paying (affects profitability) |
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labor-mkt. competition
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lower bound on pay levels
companies also contrained to not pay to little, otherwise they will not attract workers |
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ext. competitiveness
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pay level: ave. rates of pay by employer
can consider this at an overall compensation level (total base + bonuses + options)/(# employees) or just considering one factor employer can choose to lag, lead, or match competition |
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probably relations b/t ext. pay level and policies and objectives
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SEE SLIDES 4/1
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salary surveys
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"make" - create your own
"buy" - purchase data from existing surveys need to define: benchmark jobs (What you are comparing) relevant labor mkt. competitors (what companies you're comparing to) |
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combining int. and ext. info
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note: some companies only use ext. salary info. (ignoring internal structure) -- "mkt. pricing"
other companies combine int. and ext. info. -- "pay policy"; when combining int. and ext. info., how much weight is given to each "pay grades": simplify things for admin. - every job in grade is treated similarly |
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tools for monitoring pay levels
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1. look at the distribution of pay within the pay grade
2. compa-ratios are used to evaluate ind.empployees vs. the pay grade midpoint (useful for monitoring whether pay is really staying within limits) |
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compa-ratio
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employee's pay rate divided by pay grade -- midpoint
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"across the board" pay increases
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cost of living increases
may be caused by union or contract or law or voluntary mkt. adjustments: if done for everyone in the position |
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seniority pay
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based on time with the company
- may be mandated by union - govt jobs often tie raises to seniority |
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tools for monitoring pay levels
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1. look for distribution within the pay grade
2. compa-ratios are used to evaluate individual employee pay vs. the midpoint |
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compa-ratio
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pay rate/midpoint of pay grade
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red circle rate
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outlier -- above pay grade
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green circle rate
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outlier -- below pay grade
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cash compensation
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base pay
pay contingent on performance |
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individual performance measurement
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short term:
merit pay icentive plans lump-sum bonuses spot awards |
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group performance measurement
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(for team, plant business unit, company as a whole)
short term: - gain sharing - profit sharing - team-based incentives long term: - ESOP - stock options - stock awards - performance share plans |
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merit pay programs
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base pay increase/bonus granted to an employee
identifies individual performance differences supervisor provides most info. on performance pay is usually linked to performance appraisal results usually annual usually a raise |
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typical range of merit raises
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see chart for 4/8 slides
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incentive pay
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can be annual, quarterly, or monthly
bonus of one-time payout performance measure: units produced, sales, cost savings, profit, etc. can be given to individuals, a group, or whole company examples: piecework, sales commission, management incentive plans, behavioral encouragement plans (reduction in error, increase in quality, safety), referral bonuses |
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considerations in identifying incentive systems
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controllability
alignment (narrow behavior vs. value creation) interdependency (individual vs. team vs. business unit vs. company) |
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why incentive plans are not universally appropriate
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- most jobs do not have measurable output that can attributed the effort of one person
- administrative costs to track individual pay - does not always fit with team approach - does not reward the obtaining of multiple skills - can be at the expense of quality or service )if you aren't careful in design) |
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possible disadvantages of team incentive plans
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- free riding
- can lead to increased turnover among top individual performers - hard to set equitable targets for all teams - can create inter-team competition - not all workers belong to teams - administrative issues |
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examples of gain sharing plans
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SEE 4/8 slides!!!
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profit-sharing plans
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annual bonuses or company shares are paid from corporate plans (often contingent on profitability and some other goal)
current and/or deferred to retirement payouts |
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advantages of profit sharing
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employees share in profits -- increase in productivity
gives employers flexibility to adjust payouts to economic ups and downs |
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disadvantages of profit sharing
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if it is large portion of pay, employee pay may fluctuate a lot
poor line-of-sight in company |
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equity ownership - company-wide
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ESOP: employee stock option plans
company stock owned through other retirement plans (401k) stock purchase plans stock option plans restricted stock plans |
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ESOP
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employee stock ownership plan (stock -- not options)
defined contribution retirement plan tax and financing advantages for company |
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stock purchase plan
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all f/t employees are usually eligible
able to purchase equal $ amts. of the % of salary can purchase at a discount from mkt. price (usually up to 15%) |
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stock vs. ESOP
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stock is outright ownership of company
employee stock options represent right but the not obligation to purchase stock at a certain price - usually subject to vesting requirements - options are nontradable, but usually can be traded among employees |
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vest
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elibable to exercise
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advantages of group/company incentives plans
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easier to develop performance measures than for individual plans
signals that cooperation is a desired behavior may increase participation of employees in decision making process |
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disadvantages
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line of sight may be lessened
may lead to increased turnover among top individual performers who must share in lesser contributions increases competition risk to employees because of lower income stability |
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legally required benefits
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unemployment insurance
social security medicare state compulsory disability insurance family and medical leave act (FMLA) military leave (USERRA) |
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discretionary benefits
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retirement -- defined benefit, desired contribution (401k, ESOP), profit-sharing, stock plans, etc.
life, health, disability insurance paid rest breaks, lunch, travel time not worked: vacation, sick leave, holidays |
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trends in employee benefits
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see 4/17 slides!!
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why offer benefits?
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attract and retain employees
cost advantage regulatory compliance tax advanatages collective bargaining "right thing to do" |
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cost effectiveness of benefits
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employer-provided plans can often benefit from favorable group rates (ex: life and health insurance)
even if employees have to pay for some of it, it is usually still cheaper and easier to get some coverage through an employer |
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regulatory compliacnce
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legally required benefits must be provided by almost all employers -- very small companies are exempt from some regulations
federal: employer's portion of FICA, FMLA, USERRA, etc. state: worker's comp., unemployment comp., state family leave laws, etc. |
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U.S. tax policy on benefits
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many employee benefits are not taxable to employee but are deductable by employer
tax-preferred treatment of retirement funds allows tax-free accumulation |
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collective bargaining
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during WWII and Korean way, govt. created wage and price controls
starting in 1940s, unions tried to increase and improve benefits over time most workers have begun to see benefits as entitlement common benefits in union contracts: supplementary unemployment (SUB), extended vacation, pension |
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who pays for benefits?
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employers: it appears they pay, but they often pass the costs to others
employees: if they take benefits in lieu of pay, or contribute toward part or all of the cost of benefits consumers: if cost is paid by employers, it is likely pased through to consumers taxpayers: govt. may end up providing these (ex: medicaid) which means that taxpayers ultimately end up paying |
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changing demorgraphics -- changing benefits
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42% of workers are unmarried
more cohabitating couples more same sex couples -- some have kids - CA: first state to offer domestic partner benefits - 1/2 of fortune 500 companies offer domestic partner benefits |
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trends to watch with employee benefits
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cost shifting to employees
stricter rules for employee's health habits broader definitions of family for purposes of coverages "consumer driven plans" - greater employee choice to customize benefits retirement plans: shifting to defined contribution plans |
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global employees
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expatriates
parent country nationals (PCN) host country nationals (HCN) third country nationals (TCN) |
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ethnocentric
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decisions made at HQ, subsidiaries managed by PCNs
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polycetric
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each subsidiary is a distinct national entity managed by HCNs
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geocentric
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worldwide approach, PCNs, HCNs, TCNs in all positions
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regiocentric
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like geographic but personnel only move within geographic regions
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issues with expatriates
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ineffectiveness in overseas assignments -- about 1/3 perform below expectations
expatriate failure/premmature return -- 10-2% of managers return early reprtiation problems -- repatriation can sometimes be even more stressful then overseas assignments biggest problem: retention of expats -- about 25% leave company within 1 yr. of return |
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managing expatriates more successfully
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HR levers:
selection training compensation repatriation process |
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identifying the right people to be expatriates
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things to consider:
motivation language ability family considerations resourcefulness and initiative adaptability career planning biggest mistake: choose foreign assignee based on tech. abilities only, ignoring interpersonal skills and cultural awareness |
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cross-cultural training programs
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expatriates must be clear about their own cultural background
expatriates must understand the particular aspects of the culture and the new working environment expatriates must learn to communicate accurately in the new culture (also smart to train spouses and other family members) |
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compensation of expatriates
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base salary
foreign service premiums (5-40% of base pay) allowances and benefits: cost-of-living, housing, education, relocation, spousal assistance |
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benefits for US expatriates
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standard: social security, FMLA, pay for time not worked
- NOT included: worker's comp. enhanced benefits: relocation assistance, education reimbursements for children, home leave benefits and travel reimbursement, rest and relaxation leave benefits |
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repatriation process
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- preparation
- physical relocation - transition - readjustment |
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H1-B visa
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amt. issued capped at ~65,000/yr. + 20,000 more for people with master for PhD from US university
for professional jobs including: IT/computer pros., college professors and teachers, engineers, healthcare workers, accountants, lawyers, nurses, physicians, scientists, journalists, psychologists, mkt. research analysts, etc. employer must agree to apply for visa for employee; if granted worker plus family can live in US for up to 6 yrs.; during this time, person can apply for permanent residency -- "green card" |
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green card -- permanent resident
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can obtain through employment
140,000 max. available each yr. and employer must sponsor it; 50,000 available through lottery each year, also available through family member/marraige |
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trends in union activity
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overall decline in union membership and strike activity
however there are growth trends: - increase in unionization in public sector (largest = american federation of state, county, and municipal employees) - greater organization of service workers - organization of professionals many companies still have a large amt. of union workers, esp. in certain industries |
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host country nationals (HCN)
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general hiring needs in any foreign country: concerns with language, education, transportation, employment laws, cultural differences, and competition with other workers
competition is fierce in high-growth/high competition countries (ex: India and China) companies compete for top talent by: providing training opps., building ties with employee's families, starting early and building ties with college students, providing housing and transportation, opps. for fast advancement and global travel |
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national labor relations act/ wagner act (1935)
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set rights for private sector employees to form unions, collectively bargain, and strike
created national labor relations board to investigate claims of unfair labor practices and conduct union elections |
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taft-hartly act of 1947
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defined unfair labor practices ON THE PART OF UNION
established right to work laws: allows states to enact laws where workers cannot be required to join union or pay union dies, even if they join a company where the job is unionized |
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landrum-griffin act of 1959
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regulates union activities
establishes and protects rights of union members |
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how unions impact worker wages and benefits
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impact on general compensation levels
impact on structure of wages and benefits impact on non-union firms (spillover and threat effects) union workers can earn between 8.9-124%, but sometimes even 50% more depending on industry size of gap varies from year to year: during periods of higher unempoyment and slow economy, impact of unions is larger; during strong economies, union-nonunion gap is smaller |
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structure of wage and benefit packages
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the presence of a union adds 20-30% or more to employee benefits
unionized workers have a greater percentage of their total wage bill allocated to employee benefits - higher costs are from higher pension expenditures and higher insurance benefits |
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two-tier wage structures
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more unions are accepting these -- nearly 30% of contracts use them
ex: new hires may make half what old hires made |
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unions and alternative reward systems
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unions have become receptive in recent years to alt. reward ssytems that link and to performance
20% of collective bargaining agreements permit some alternative reward system - ex: lump sums, piece rate, gain-sharing, profit-sharing, skill-based pay, ESOP |
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union impact on nonunion workers -- spillover/threat effect
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employers seek to avoid unionization by offering workers the wages, benefits, and working conditions that rival unionized firms
nonunion mgmt. continues to enjoy freedom from union interference in decision making nonunion workers receive spillover of rewards obtained by their unionized counterparts |
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reasons for decline in union membership
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companies that offer employee-friendly HRM practices -- less need for unions
replaced by govt. regulation, laws -- EEO, OSHA, and other regulations offer protection union actions can have a bad public image structural changes in economy -- service sector growth increased employer resistance -- global competition, shifting production to states with low union membership or overseas |
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states with highest union memberships
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hawaii
NY alaska NJ |
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states with lowest union membership
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NC
SC virginia georgia texas |